Realtors report drop in existing home sales
Existing-home sales and prices dropped in November compared to the same month last year, the National Association of Realtors
The median price of existing homes dropped for the fourth consecutive month to $218,000, down 3.1 percent compared to November 2005. The average price of existing homes, at $266,000 in November, fell 1.8 percent compared to the same month last year.
Existing-home sales in the Midwest were unchanged in November, holding at a level of 1.42 million, and were 9.6 percent lower than November 2005. The median price in the Midwest was $165,000, which is 3.5 percent below a year ago. more from NAR
Thursday, December 28, 2006
realtors report drop in existing home sales
Realtors report drop in existing home sales
Existing-home sales and prices dropped in November compared to the same month last year, the National Association of Realtors
The median price of existing homes dropped for the fourth consecutive month to $218,000, down 3.1 percent compared to November 2005. The average price of existing homes, at $266,000 in November, fell 1.8 percent compared to the same month last year.
Existing-home sales in the Midwest were unchanged in November, holding at a level of 1.42 million, and were 9.6 percent lower than November 2005. The median price in the Midwest was $165,000, which is 3.5 percent below a year ago. more from NAR
Existing-home sales and prices dropped in November compared to the same month last year, the National Association of Realtors
The median price of existing homes dropped for the fourth consecutive month to $218,000, down 3.1 percent compared to November 2005. The average price of existing homes, at $266,000 in November, fell 1.8 percent compared to the same month last year.
Existing-home sales in the Midwest were unchanged in November, holding at a level of 1.42 million, and were 9.6 percent lower than November 2005. The median price in the Midwest was $165,000, which is 3.5 percent below a year ago. more from NAR
Wednesday, December 27, 2006
Mortgage Fraud Increases
Mortgage Fraud Increases:
Mortgage fraud is now a criminal enterprise that puts dollars in the hands of people who also are involved in such other crimes as drugs, murders and gangs," Stern told the conference.As of early this month, the G-man reported, the number of suspicious activity reports concerning mortgage fraud is up 62 percent from a year earlier. That, he said, "is a stark increase" compared to those alleging commercial loan fraud and false statements..... more from Mortgage Fraud
Mortgage Fraud Increases
Mortgage Fraud Increases:
Mortgage fraud is now a criminal enterprise that puts dollars in the hands of people who also are involved in such other crimes as drugs, murders and gangs," Stern told the conference.As of early this month, the G-man reported, the number of suspicious activity reports concerning mortgage fraud is up 62 percent from a year earlier. That, he said, "is a stark increase" compared to those alleging commercial loan fraud and false statements..... more from Mortgage Fraud
Controlling Car Insurance Costs - The Big Picture
Car insurance in New York is a highly competitive business. You can't pick up a newspaper, listen to the radio, watch TV, or drive by billboards without being assaulted by cute little lizards with Australian accents, companies urging you to honk, etc... As we all know (or at least think we know) competition is very good for consumers, resulting in lower rates and better service as companies trip over each other trying to win your business.
Or does it really work that way? In theory, it should, and certainly we as agents have experienced rate reductions with our carriers, as well as new programs that have lowered costs a good amount for many people. But in a report by New York City comptroller William C. Thompson Jr., as reported in the Insurance Advocate, an industry trade magazine for the tri-state area, it seems like the competitive process is not working well enough or fast enough to be fair to the end consumer.
Now it would be pretty obvious that Mr. Thompson has a particular 'bias' towards his constituents, the residents of New York City. The city tends to be a difficult place for insurance companies to do business, with a high concentration of values, a lot of traffic congestion, and pockets of massive fraud. Still, his statistics apply to the whole state and present a picture that suggests insurance companies have a long way to go to get to rates that are fair to all.
He points out that in 2005, premiums of $10.5 billion were reported, against losses of $5.1 billion, leading to record profits among auto insurers. (Did you think they were doing all this advertising because they just like us a lot as people?) Those premiums are up 29% since 2000, while losses are down by over 20%!
In fairness, he notes that premiums have dropped somewhat and continue to drop. Insurance companies tend to be very conservative, and they are very careful because one good year does not make for a trend in lower costs. In addition, because of injuries that take a long time to treat, and lawsuits that can take years going through the courts, as well as insurance department rules that cause it to take time to process rate changes, we can't expect rates to change this month based on last month's claims.
Still, five years is a long time, and he makes very valid arguments for lower rates and more scrutiny from regulators and municipalities in trying to get the best rate for the buying public. Insurance is not an optional purchase, it's more like a tax on people, with private companies given the right to collect that tax. In that sort of situation, maybe not totally unlike rail, gas, and electric utilities, it's part of the government's job to make sure that private companies are not taking unfair advantage.
You can view Mr. Thompson's full report at http://www.comptroller.nyc.gov/.
Or does it really work that way? In theory, it should, and certainly we as agents have experienced rate reductions with our carriers, as well as new programs that have lowered costs a good amount for many people. But in a report by New York City comptroller William C. Thompson Jr., as reported in the Insurance Advocate, an industry trade magazine for the tri-state area, it seems like the competitive process is not working well enough or fast enough to be fair to the end consumer.
Now it would be pretty obvious that Mr. Thompson has a particular 'bias' towards his constituents, the residents of New York City. The city tends to be a difficult place for insurance companies to do business, with a high concentration of values, a lot of traffic congestion, and pockets of massive fraud. Still, his statistics apply to the whole state and present a picture that suggests insurance companies have a long way to go to get to rates that are fair to all.
He points out that in 2005, premiums of $10.5 billion were reported, against losses of $5.1 billion, leading to record profits among auto insurers. (Did you think they were doing all this advertising because they just like us a lot as people?) Those premiums are up 29% since 2000, while losses are down by over 20%!
In fairness, he notes that premiums have dropped somewhat and continue to drop. Insurance companies tend to be very conservative, and they are very careful because one good year does not make for a trend in lower costs. In addition, because of injuries that take a long time to treat, and lawsuits that can take years going through the courts, as well as insurance department rules that cause it to take time to process rate changes, we can't expect rates to change this month based on last month's claims.
Still, five years is a long time, and he makes very valid arguments for lower rates and more scrutiny from regulators and municipalities in trying to get the best rate for the buying public. Insurance is not an optional purchase, it's more like a tax on people, with private companies given the right to collect that tax. In that sort of situation, maybe not totally unlike rail, gas, and electric utilities, it's part of the government's job to make sure that private companies are not taking unfair advantage.
You can view Mr. Thompson's full report at http://www.comptroller.nyc.gov/.
Sunday, December 24, 2006
dick watts insurance in Kentucky
We are proud to announce that we have completely updated our website Dick Watts Insurance
At Dick Watts Insurance Inc we are committed to providing excellent customer service. Our focus remains in Auto Insurance Ky, Homeowners Insurance Ky, and Life Insurance Ky . We have added an all new Customer Service Area, where you can report a claim, contact us by instant message, order proof of insurance cards, or send just to send us an email.
At Dick Watts Insurance Inc we are committed to providing excellent customer service. Our focus remains in Auto Insurance Ky, Homeowners Insurance Ky, and Life Insurance Ky . We have added an all new Customer Service Area, where you can report a claim, contact us by instant message, order proof of insurance cards, or send just to send us an email.
dick watts insurance in Kentucky
We are proud to announce that we have completely updated our website Dick Watts Insurance
At Dick Watts Insurance Inc we are committed to providing excellent customer service. Our focus remains in Auto Insurance Ky, Homeowners Insurance Ky, and Life Insurance Ky . We have added an all new Customer Service Area, where you can report a claim, contact us by instant message, order proof of insurance cards, or send just to send us an email.
At Dick Watts Insurance Inc we are committed to providing excellent customer service. Our focus remains in Auto Insurance Ky, Homeowners Insurance Ky, and Life Insurance Ky . We have added an all new Customer Service Area, where you can report a claim, contact us by instant message, order proof of insurance cards, or send just to send us an email.
Tuesday, November 28, 2006
Trying to Sort Out the Homeowners Insurance Mess
I hope everybody had a happy Thanksgiving.
Today I was reading one of a number of insurance industry email newsletters that come daily. It's the modern way to keep up with what's going on. One particular article caught my attention and relates back in an interesting way to our ongoing discussion of the Long Island homeowners insurance situation.
The article says that a new company is rolling out a big car insurance program across the country in something like 35 states including New York. But the auto insurance market in NY is, if anything, super competitive and super saturated. The big direct writers and one-company-agent companies have long held most of that market and so they are battling it out for the most part amongst themselves. '35% Savings' and 'New Low Rates' are all over the place.
But there is so much money to be made on car insurance overall that new companies continue to want to enter the fray. It's very good for consumers because the competition keeps prices low and service levels high.
So what does this have to do with homeowners insurance on Long Island, you may well ask. Well, I did too. So I went to the new company's web site and looked around. There was the car insurance product, branded under their name. Then when I looked at the homeowners insurance page, a different link showed up in the sidebar. It said 'view a list of the 40+ insurance companies we represent'. A very impressive statement, but it doesn't show up on the auto insurance page at all.
Why? Because like GEICO and Progressive and AIG and any number of 'auto only' programs, this new company doesn't want to get involved with property insurance except as a selling agent or broker! Yes, auto insurance is profitable right now. But more importantly, car insurance is homogeneous across the country. There are variations in state law, but for the most part, it's something the insurance carriers can work with.
But since 9-11 and Katrina, insurers have begun to realize that HUGE amounts of property in the form of homes and businesses can be wiped out in one event, and that those events can actually occur. The industry was able to pay for Katrina but what about here, with our row upon row of million dollar homes?
So part of the key to solving the Long Island homeowners insurance issue in the short run is diversification, spreading it out to more companies. In the longer run, there are other possibilities including government backstops, all-peril insurance policies, catastrophe bonding, and some exotic financial instruments that are beyond the scope of this blog (meaning I don't understand some of them either)
More to certainly come. Next: What's happening in Flood Insurance.
Today I was reading one of a number of insurance industry email newsletters that come daily. It's the modern way to keep up with what's going on. One particular article caught my attention and relates back in an interesting way to our ongoing discussion of the Long Island homeowners insurance situation.
The article says that a new company is rolling out a big car insurance program across the country in something like 35 states including New York. But the auto insurance market in NY is, if anything, super competitive and super saturated. The big direct writers and one-company-agent companies have long held most of that market and so they are battling it out for the most part amongst themselves. '35% Savings' and 'New Low Rates' are all over the place.
But there is so much money to be made on car insurance overall that new companies continue to want to enter the fray. It's very good for consumers because the competition keeps prices low and service levels high.
So what does this have to do with homeowners insurance on Long Island, you may well ask. Well, I did too. So I went to the new company's web site and looked around. There was the car insurance product, branded under their name. Then when I looked at the homeowners insurance page, a different link showed up in the sidebar. It said 'view a list of the 40+ insurance companies we represent'. A very impressive statement, but it doesn't show up on the auto insurance page at all.
Why? Because like GEICO and Progressive and AIG and any number of 'auto only' programs, this new company doesn't want to get involved with property insurance except as a selling agent or broker! Yes, auto insurance is profitable right now. But more importantly, car insurance is homogeneous across the country. There are variations in state law, but for the most part, it's something the insurance carriers can work with.
But since 9-11 and Katrina, insurers have begun to realize that HUGE amounts of property in the form of homes and businesses can be wiped out in one event, and that those events can actually occur. The industry was able to pay for Katrina but what about here, with our row upon row of million dollar homes?
So part of the key to solving the Long Island homeowners insurance issue in the short run is diversification, spreading it out to more companies. In the longer run, there are other possibilities including government backstops, all-peril insurance policies, catastrophe bonding, and some exotic financial instruments that are beyond the scope of this blog (meaning I don't understand some of them either)
More to certainly come. Next: What's happening in Flood Insurance.
Saturday, November 4, 2006
Mild Hurricane Season Brings Record Insurance Profits
The past few weeks have brought third quarter earnings reports from some of the major insurance carriers, and it's been interesting. As has been discussed here during our articles about the homeowners insurance situation here on Long Island and elsewhere along the coast, insurance carriers spent the last year and a half goint into a very conservative mode, cutting back on their coastal property risk (by cancelling policies in the case of Allstate, Encompass, Vesta Shelby and others) and raising prices.
What has happened is that this ended up being one of the mildest seasons in years for catastrophes such as hurricanes, and so we are seeing reports in the newspapers and financial publications that the companies are showing record profits. Sort of like what happened to the oil companies whe prices rose a few months back.
Unfortunately, and maybe rightly so, these record profits will, if the industry is not very careful, create a public relations nightmare. While they are canceling policies and restricting coverages, crying that they need to protect themselves from catastrophe risk, the idea that their shareholders are making tons of money does not seem to be in the best public interest.
In addition, they are not encouraged by tax laws to put this money away for possible future losses, as would seem to make sense. Unfortunately insurance carriers are not allowed to set aside money on a tax-deferred basis for future losses. And we all know that savings, whether it's your personal IRA or other retirement plan, or planning for catastrophes, is driven by the tax code.
One of the parts of the overall future plans to help insurance carriers and the public to deal with the problems in the homeowers and flood insurance areas will be the ability to put money away on a tax-deferred basis to cover possible future losses. This will apply to both insurance carriers and insurance customers.
For the carriers, they would then be able to take some of these record profits and put them away for the inevitable bad year. Unfortunately Congress could not get agreement on this quickly enough to help with the current profits, which would have made for a great opportunity to get started.
This sort of thing will help consumers as well. Right now in the Long Island homeowners insurance market, most people anywhere near the water (and we're talking 3-5 miles here, which includes most of the island) face a deductible on their home insurance policy of anywhere from $5,000 to $20,000 or more. (Most deductibles are in the form of a percentage of the coverage on your house - if you don't understand your coverage, please ask your agent or visit our web site at www.NYInsuranceWithService.com for contact info and we will explain it to you at no cost or obligation) . One proposal currently being reviewed would allow people to set up tax-deferred savings accounts, similar to an IRA, that would be used to cover that deductible in the event a major storm struck.
As always, for more info please visit our site and/or contact us. Insurance is one of those areas that the public needs to educate itself, because your policy these days can come back to bite you at the time you need it most.
What has happened is that this ended up being one of the mildest seasons in years for catastrophes such as hurricanes, and so we are seeing reports in the newspapers and financial publications that the companies are showing record profits. Sort of like what happened to the oil companies whe prices rose a few months back.
Unfortunately, and maybe rightly so, these record profits will, if the industry is not very careful, create a public relations nightmare. While they are canceling policies and restricting coverages, crying that they need to protect themselves from catastrophe risk, the idea that their shareholders are making tons of money does not seem to be in the best public interest.
In addition, they are not encouraged by tax laws to put this money away for possible future losses, as would seem to make sense. Unfortunately insurance carriers are not allowed to set aside money on a tax-deferred basis for future losses. And we all know that savings, whether it's your personal IRA or other retirement plan, or planning for catastrophes, is driven by the tax code.
One of the parts of the overall future plans to help insurance carriers and the public to deal with the problems in the homeowers and flood insurance areas will be the ability to put money away on a tax-deferred basis to cover possible future losses. This will apply to both insurance carriers and insurance customers.
For the carriers, they would then be able to take some of these record profits and put them away for the inevitable bad year. Unfortunately Congress could not get agreement on this quickly enough to help with the current profits, which would have made for a great opportunity to get started.
This sort of thing will help consumers as well. Right now in the Long Island homeowners insurance market, most people anywhere near the water (and we're talking 3-5 miles here, which includes most of the island) face a deductible on their home insurance policy of anywhere from $5,000 to $20,000 or more. (Most deductibles are in the form of a percentage of the coverage on your house - if you don't understand your coverage, please ask your agent or visit our web site at www.NYInsuranceWithService.com for contact info and we will explain it to you at no cost or obligation) . One proposal currently being reviewed would allow people to set up tax-deferred savings accounts, similar to an IRA, that would be used to cover that deductible in the event a major storm struck.
As always, for more info please visit our site and/or contact us. Insurance is one of those areas that the public needs to educate itself, because your policy these days can come back to bite you at the time you need it most.
Saturday, October 14, 2006
Mommy, Where Do Insurance Companies Come From?
Hi All. Sorry for the long break between posts. I was away for five days at the annual Rotary International Northeastern U.S. conference, and another five wonderful days visiting Mickey and friends in Florida. Nice to get away but somehow life keeps happening behind your back and likes to spring on you when you come home.
In any event, I thought it would be interesting to write a little about the origins of insurance in general, and homeowners insurance in particular. A lot of people tend to think of insurance as one of those pain-in-the-neck things that the State or their bank makes them buy, but the truth is that a lot of the things we like so much, ownership of property being a big one, driving a car another, would be impossible without some mechanism to spread the risk.
A couple of thousand years ago, people lived in mostly small huts that could be rebuilt with a neighbor's help in a couple of days. And if you lived in a big house, you probably had plenty of money, and slaves to do the re-building if there was a fire or other damage. The concept of insuring something of value started with seagoing trade between nations and continents, and so the field of Marine Insurance was born. Marine insurance is the oldest and probably most interesting of all insurance. It continues today both in the Ocean Marine type as well as Inland Marine which is used to write everything from giant cranes and bulldozers to your diamond engagement ring insured on a rider to your homeowners insurance policy.
Back in the early days of shipping trade along the Mediterranean Sea (thing Ancient Greece), ships started to bring gold, spices, silks, and lots of other interesting stuff from foreign ports of call back to sell in their home areas. After a while, the value of the cargoes carried got so high that the ship owner/captain could not afford the risk to the cargo. Although standard shipping rules even in those days did not make the captain responsible for all losses, even if he was not held accountable, he still might lose all the revenue from the sale of a lost cargo, and that could put him out of business and land him in debtor's prison.
So someone came up with the idea that wealthy merchants could absorb all or a part of the loss that might happen from certain agreed-upon perils such as storm loss, stranding, barratry (fraudulent acts of the captain or crew) or other 'perils of the sea'. In return for their promise to pay a certain amount to the owner of the cargo in case of loss, they received a payment from the owner called a 'premium'.
This would be done at the local taverns down near the seaports. A captain would post on a board that he was bringing a certain amount of such and such cargo from a named place, and local merchants and others would write their names under the posting including the amount of risk they were willing to accept. This is the direct beginning of the term 'underwriter', and in a broad way is still the way insurance is transacted by Lloyd's of London, the most famous insurer in the world.
For instance, if someone wants to insure the legs of a famous movie star for $10,000,000, it is presented to Lloyd's or another similar company (Lloyds is actually a group of many syndicated made up of people and organizations with money they would like to invest in this type of insurance). One or more syndicates will step forward and offer to accept all or part of the risk for a certain premium that they calculate.
The people who calculate what rates to charge for insurance are called actuaries, and are some of the best math and accounting people on the planet. They make or break the success of insurance companies, and the good ones are very highly paid for their efforts.
More next time. Meanwhile, for more info visit our site at www.NYInsuranceWithService.com
In any event, I thought it would be interesting to write a little about the origins of insurance in general, and homeowners insurance in particular. A lot of people tend to think of insurance as one of those pain-in-the-neck things that the State or their bank makes them buy, but the truth is that a lot of the things we like so much, ownership of property being a big one, driving a car another, would be impossible without some mechanism to spread the risk.
A couple of thousand years ago, people lived in mostly small huts that could be rebuilt with a neighbor's help in a couple of days. And if you lived in a big house, you probably had plenty of money, and slaves to do the re-building if there was a fire or other damage. The concept of insuring something of value started with seagoing trade between nations and continents, and so the field of Marine Insurance was born. Marine insurance is the oldest and probably most interesting of all insurance. It continues today both in the Ocean Marine type as well as Inland Marine which is used to write everything from giant cranes and bulldozers to your diamond engagement ring insured on a rider to your homeowners insurance policy.
Back in the early days of shipping trade along the Mediterranean Sea (thing Ancient Greece), ships started to bring gold, spices, silks, and lots of other interesting stuff from foreign ports of call back to sell in their home areas. After a while, the value of the cargoes carried got so high that the ship owner/captain could not afford the risk to the cargo. Although standard shipping rules even in those days did not make the captain responsible for all losses, even if he was not held accountable, he still might lose all the revenue from the sale of a lost cargo, and that could put him out of business and land him in debtor's prison.
So someone came up with the idea that wealthy merchants could absorb all or a part of the loss that might happen from certain agreed-upon perils such as storm loss, stranding, barratry (fraudulent acts of the captain or crew) or other 'perils of the sea'. In return for their promise to pay a certain amount to the owner of the cargo in case of loss, they received a payment from the owner called a 'premium'.
This would be done at the local taverns down near the seaports. A captain would post on a board that he was bringing a certain amount of such and such cargo from a named place, and local merchants and others would write their names under the posting including the amount of risk they were willing to accept. This is the direct beginning of the term 'underwriter', and in a broad way is still the way insurance is transacted by Lloyd's of London, the most famous insurer in the world.
For instance, if someone wants to insure the legs of a famous movie star for $10,000,000, it is presented to Lloyd's or another similar company (Lloyds is actually a group of many syndicated made up of people and organizations with money they would like to invest in this type of insurance). One or more syndicates will step forward and offer to accept all or part of the risk for a certain premium that they calculate.
The people who calculate what rates to charge for insurance are called actuaries, and are some of the best math and accounting people on the planet. They make or break the success of insurance companies, and the good ones are very highly paid for their efforts.
More next time. Meanwhile, for more info visit our site at www.NYInsuranceWithService.com
Saturday, September 23, 2006
Long Island Homeowners and Flood Insurance Issues, Continued
It's been a few weeks since I had a chance to write a post. Mostly it's because we have been renovating my office. We have had two or three work crews at a time here daily. Now it's getting down to the trim and painting, so it's just a little slower. You can see pictures of how it's coming out at my other blog, www.aroundbabylon.com.
Anyway, my being busy has not stopped things from happening in the Long Island homeowners insurance and flood insurance market. Since I last wrote, several more companies, some of them fairly large players, have either announced that they will no longer be writing homeowners insurance either here on Long Island or, in some cases, in New York State.
Part of the problem is that here on Long Island is where the largest concentration of high valued homes exists. So many companies tried to write lots of business here to increase their cash flow, but are now in panic mode because after seeing what happened with hurricane Katrina, they now realize that they have a big exposure here that is not offset by customers in other areas that are not subject to 'coastal' issues.
For instance, it's not that people in upstate New York never have claims. And they DO have 'catastrophic' claims using the insurance meaning, which refers to something that affects a lot of people all at once, as opposed to a fire at someone's house, which might melt some siding on the house next to it, but generally does not affect a whole area.
In some upstate counties, for instance, they can have major ice storms that damage a lot of houses. But it's still not nearly the same as here on Long Island, because the houses tend to be much further apart (less concentrated) in most upstate areas, and the values are lower. As we all know, a house that sells for $450,000 here can still be had for $200,000 in most other parts of the country, maybe even less in some.
Interestingly, some of these areas that you would not expect have flood issues as well. Newsday a couple of weeks ago had an article about a number of people who live in Pennsylvania, along the Delaware river, just 'downstream' from the reservoir system that provides water to New York City. It seems that because of droughts that have occurred in the past few years, the water people now try to keep the reservoirs at 100% of capacity. But the flip side of that is when it rains a lot, BILLIONS of gallons of water overflow the reservoirs and have been creating flooding problems along the Delaware river!
There are a lot of post-Katrina changes coming to the Federal Flood Insurance program through FEMA, and some of them won't be pleasant for those living in primary and secondary flood hazard areas. More to follow on that, but in the meantime if you have questions, you can contact us through our web site at www.FloodInsuranceNY.com
Anyway, my being busy has not stopped things from happening in the Long Island homeowners insurance and flood insurance market. Since I last wrote, several more companies, some of them fairly large players, have either announced that they will no longer be writing homeowners insurance either here on Long Island or, in some cases, in New York State.
Part of the problem is that here on Long Island is where the largest concentration of high valued homes exists. So many companies tried to write lots of business here to increase their cash flow, but are now in panic mode because after seeing what happened with hurricane Katrina, they now realize that they have a big exposure here that is not offset by customers in other areas that are not subject to 'coastal' issues.
For instance, it's not that people in upstate New York never have claims. And they DO have 'catastrophic' claims using the insurance meaning, which refers to something that affects a lot of people all at once, as opposed to a fire at someone's house, which might melt some siding on the house next to it, but generally does not affect a whole area.
In some upstate counties, for instance, they can have major ice storms that damage a lot of houses. But it's still not nearly the same as here on Long Island, because the houses tend to be much further apart (less concentrated) in most upstate areas, and the values are lower. As we all know, a house that sells for $450,000 here can still be had for $200,000 in most other parts of the country, maybe even less in some.
Interestingly, some of these areas that you would not expect have flood issues as well. Newsday a couple of weeks ago had an article about a number of people who live in Pennsylvania, along the Delaware river, just 'downstream' from the reservoir system that provides water to New York City. It seems that because of droughts that have occurred in the past few years, the water people now try to keep the reservoirs at 100% of capacity. But the flip side of that is when it rains a lot, BILLIONS of gallons of water overflow the reservoirs and have been creating flooding problems along the Delaware river!
There are a lot of post-Katrina changes coming to the Federal Flood Insurance program through FEMA, and some of them won't be pleasant for those living in primary and secondary flood hazard areas. More to follow on that, but in the meantime if you have questions, you can contact us through our web site at www.FloodInsuranceNY.com
Tuesday, September 19, 2006
1001 SECRET FISHING HOLES
1001 SECRET FISHING HOLES,
1. over 34 million people went fishing
2. they fished an average of 16 days per participant and spent an average $1,046 each
3. overall, anglers spent $14.7 billion in 2001 for fishing trips, $17 billion on equipment, and $4 billion for licenses, stamps, tags, land leasing and ownership, membership dues and contributions, and magazines.... 1001 SECRET FISHING HOLES
- HUNDREDS OF NATIONAL PARKS
- HUNDREDS OF WILDLIFE REFUGES
- OVER A 1000 LAKES & HISTORICAL TRAILS
1. over 34 million people went fishing
2. they fished an average of 16 days per participant and spent an average $1,046 each
3. overall, anglers spent $14.7 billion in 2001 for fishing trips, $17 billion on equipment, and $4 billion for licenses, stamps, tags, land leasing and ownership, membership dues and contributions, and magazines.... 1001 SECRET FISHING HOLES
1001 SECRET FISHING HOLES
1001 SECRET FISHING HOLES,
1. over 34 million people went fishing
2. they fished an average of 16 days per participant and spent an average $1,046 each
3. overall, anglers spent $14.7 billion in 2001 for fishing trips, $17 billion on equipment, and $4 billion for licenses, stamps, tags, land leasing and ownership, membership dues and contributions, and magazines.... 1001 SECRET FISHING HOLES
- HUNDREDS OF NATIONAL PARKS
- HUNDREDS OF WILDLIFE REFUGES
- OVER A 1000 LAKES & HISTORICAL TRAILS
1. over 34 million people went fishing
2. they fished an average of 16 days per participant and spent an average $1,046 each
3. overall, anglers spent $14.7 billion in 2001 for fishing trips, $17 billion on equipment, and $4 billion for licenses, stamps, tags, land leasing and ownership, membership dues and contributions, and magazines.... 1001 SECRET FISHING HOLES
Sunday, September 10, 2006
Buddy Walk - Down's Syndrome of Louisville
Buddy Walk 2006 Down's Synrome of Louisville
Downs Syndrome of Louisville Buddy Walk.
National Down's Syndrome Society
Downs Syndrome of Louisville Buddy Walk.
About Downs Syndrome of Louisville (from their website)The 5k walk on Watefront Park actually starts at 9:45 am, registration for the walk is at 8:30 am. BUDDY WALK REGISTRATION
"Down Syndrome of Louisville, Inc. (DSL) is a non-profit organization formed in 1991 by a group of parents of children with Down Syndrome. The group originated as a parent support group of the Early Education Funding Program for children with Down Syndrome. In January 1993 this group merged with Down Syndrome of Louisville, Inc. Our organization is dedicated to educating the community on the positive values of persons with Down Syndrome...... About
National Down's Syndrome Society
If you would like to help us support the Buddy Walk, please call us
at 502-245-3625.
Tags:
Buddy Walk - Down's Syndrome of Louisville
Buddy Walk 2006 Down's Synrome of Louisville
Downs Syndrome of Louisville Buddy Walk.
National Down's Syndrome Society
Downs Syndrome of Louisville Buddy Walk.
About Downs Syndrome of Louisville (from their website)The 5k walk on Watefront Park actually starts at 9:45 am, registration for the walk is at 8:30 am. BUDDY WALK REGISTRATION
"Down Syndrome of Louisville, Inc. (DSL) is a non-profit organization formed in 1991 by a group of parents of children with Down Syndrome. The group originated as a parent support group of the Early Education Funding Program for children with Down Syndrome. In January 1993 this group merged with Down Syndrome of Louisville, Inc. Our organization is dedicated to educating the community on the positive values of persons with Down Syndrome...... About
National Down's Syndrome Society
If you would like to help us support the Buddy Walk, please call us
at 502-245-3625.
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Monday, August 28, 2006
Insurance Groups Disagree on Catastrophe Insurance
As we look back at Katrina with a year of perspective and new information on what can happen in a major hurricane, the insurance industry continues to hash out what needs to be done to try to make the next such event 'less awful'. And they don't agree among themselves. I read an interesting article recently about one of the major points of disagreement.
I think most non-insurance people would probably think that ALL the insurance carriers would immediately agree to what would amount to a Federal government bailout the next time there is a major catastrophe whether natural (a la Katrina) or man-made (think 9-11-2001). But the reality is quite different.
The American Insurance Association (AIA), which represents over 400 insurance companies writing $120 billion in premiums, came out with a National Catastrophe Agenda that contains specific steps they believe are necessary to prepare. They have recommendations for government officials, individuals, businesses, and insurance carriers. They believe that if we all work together doing things like strenghtening and enforcing building codes, giving tax incentives for retro-fitting changes to existing homes, improvements in the FEMA Flood Insurance program, and numerous other areas, we can greatly improve our overall readiness and restoration afterwards.
The one piece they don't necessarily want, believe it or not, is a federal backstop for major insurance losses. Their feeling is that, so far anyway, the private reinsurance market has been able to take care of 'backstopping' catastrophes through the standard industry practice of insurance companies buying their own insurance, in the form of reinsurance, for the large losses. They know there is work to be done with State insurance departments about how reinsurance costs are passed along (or not) to the consumer, but still overall they believe that there are sufficient resources in the private sector and prefer not to increase government costs and regulation.
On the other side of this issue, is a major player. This player is, first of all, quite large enough to be entitled to their own point of view. They also have gone along for many years with NO reinsurance protection, believing they were large enough to spread their catastrophe losses over their huge client base across the country. Unfortunately, four hurricanes in a couple of weeks in Florida, followed by Katrina a year later, pointed out a weakness in their plan.
That player is Allstate. Now that they have found just how badly they could be hurt because they wrote as much insurance as they possibly could in coastal areas, (not just right on the water, the danger zone goes 10 miles inland. That's why Long Island is having a particularly nasty time with homeowners insurance right now. Pretty much everything on Long Island is within 10 miles of a shore) they are in full-blown panic mode. Their management has a clear obligation to their stockholders to do something about this situation, hence all the canceled homeowners insurance policies all over Long Island and the downstate New York area.
Anyway, Allstate says the AIA proposal is badly lacking in that one key area - a Federal government 'backstop' that would basically bail out Allstate and maybe a few of the other really big players in a major catastrophe. This basically amounts to getting reinsurance that they should have been buying all along, but guaranteed by the government. They also figure that if it's a government program, even though they would probably have to put large amounts of money into the program, they would also probably be allowed to include those costs in their rates. Currently in New York, insurance companies are NOT allowed to include reinsurance costs in calculating rates. Rates have to be based on loss history that can be demonstrated with historical data. Reinsurance doesn't come in to play as far as the State Insurance Department is concerned.
These programs always get SOME funding from within the industry. The most common example is FDIC insurance for bank accounts. Banks pay a percentage of their income into a fund that is then used to cover insured accounts at failed banks. But when something really bad happens, like the Savings and Loan debacle of the 1980's, the taxpayer ends up footing most of the bill. In addition, the S&L bailout showed that big companies (in that case, banks, but it applies to big insurance companies too) tend to be a lot less prudent and careful when they know their mistakes will be covered by taxpayer dollars.
It's all very interesting. And it will affect our daily lives here on Long Island in the form of higher homeowners and flood insurance costs going forward, no matter how you slice it. As always, for more info you can contact us through our web site at www.NYInsuranceWithService.com.
I think most non-insurance people would probably think that ALL the insurance carriers would immediately agree to what would amount to a Federal government bailout the next time there is a major catastrophe whether natural (a la Katrina) or man-made (think 9-11-2001). But the reality is quite different.
The American Insurance Association (AIA), which represents over 400 insurance companies writing $120 billion in premiums, came out with a National Catastrophe Agenda that contains specific steps they believe are necessary to prepare. They have recommendations for government officials, individuals, businesses, and insurance carriers. They believe that if we all work together doing things like strenghtening and enforcing building codes, giving tax incentives for retro-fitting changes to existing homes, improvements in the FEMA Flood Insurance program, and numerous other areas, we can greatly improve our overall readiness and restoration afterwards.
The one piece they don't necessarily want, believe it or not, is a federal backstop for major insurance losses. Their feeling is that, so far anyway, the private reinsurance market has been able to take care of 'backstopping' catastrophes through the standard industry practice of insurance companies buying their own insurance, in the form of reinsurance, for the large losses. They know there is work to be done with State insurance departments about how reinsurance costs are passed along (or not) to the consumer, but still overall they believe that there are sufficient resources in the private sector and prefer not to increase government costs and regulation.
On the other side of this issue, is a major player. This player is, first of all, quite large enough to be entitled to their own point of view. They also have gone along for many years with NO reinsurance protection, believing they were large enough to spread their catastrophe losses over their huge client base across the country. Unfortunately, four hurricanes in a couple of weeks in Florida, followed by Katrina a year later, pointed out a weakness in their plan.
That player is Allstate. Now that they have found just how badly they could be hurt because they wrote as much insurance as they possibly could in coastal areas, (not just right on the water, the danger zone goes 10 miles inland. That's why Long Island is having a particularly nasty time with homeowners insurance right now. Pretty much everything on Long Island is within 10 miles of a shore) they are in full-blown panic mode. Their management has a clear obligation to their stockholders to do something about this situation, hence all the canceled homeowners insurance policies all over Long Island and the downstate New York area.
Anyway, Allstate says the AIA proposal is badly lacking in that one key area - a Federal government 'backstop' that would basically bail out Allstate and maybe a few of the other really big players in a major catastrophe. This basically amounts to getting reinsurance that they should have been buying all along, but guaranteed by the government. They also figure that if it's a government program, even though they would probably have to put large amounts of money into the program, they would also probably be allowed to include those costs in their rates. Currently in New York, insurance companies are NOT allowed to include reinsurance costs in calculating rates. Rates have to be based on loss history that can be demonstrated with historical data. Reinsurance doesn't come in to play as far as the State Insurance Department is concerned.
These programs always get SOME funding from within the industry. The most common example is FDIC insurance for bank accounts. Banks pay a percentage of their income into a fund that is then used to cover insured accounts at failed banks. But when something really bad happens, like the Savings and Loan debacle of the 1980's, the taxpayer ends up footing most of the bill. In addition, the S&L bailout showed that big companies (in that case, banks, but it applies to big insurance companies too) tend to be a lot less prudent and careful when they know their mistakes will be covered by taxpayer dollars.
It's all very interesting. And it will affect our daily lives here on Long Island in the form of higher homeowners and flood insurance costs going forward, no matter how you slice it. As always, for more info you can contact us through our web site at www.NYInsuranceWithService.com.
Wednesday, August 23, 2006
call us for a free homeowners insurance quote
call us for a free homeowners insurance quote 502-245-3625
call us for a free homeowners insurance quote
call us for a free homeowners insurance quote 502-245-3625
Monday, August 14, 2006
The Long Island Homeowners Insurance Mess Continues
It's been a couple of weeks since I actually have had the time to post here on the blog. Our office has been swamped with calls and visits. The chief reason this time is that another homeowners insurance carrier has pulled out of Long Island.
This time it's a carrier who specialized in waterfront property, and rather than make a decision to gradually lower their concentration of customers on Long Island for home insurance, as Allstate did, this company was put into receivership by the Texas Department of Insurance and was required to cancel ALL their policies in New York as of August 24, 2006.
The company, Vesta Insurance otherwise known as Shelby Casualty was a relative newcomer, having only entered the home insurance market in the past few years. But almost all their policies were for homes right on the water, and so between that and the fact that they all are running out the same day, it's been hectic for all agents trying to find other carriers. About 8600 homeowners insurance policies were affected.
On the plus side, recent analysis of weather patterns now suggests that we may NOT be in for a more active storm year than usual, and that the chances of a Katrina-sized storm hitting us this year may actually be lower than normal. This is good news, but it still does not mean that there is NO chance, and it looks like when (not if) such a storm does hit, the dislocation in the Long Island insurance market is going to be tremendous.
Meanwhile there was a good opinion piece in this past Sunday's Newsday considering whether hurricane/windstorm needs to be put in the same category as flood insurance, unemployment, and several other key types of insurance that are considered potentially so large that only the government has the resources to assume the risk, based on their taxing power.
This article is fine as far as it goes, though it does not get into the fact that building codes also need to be changed, people need to take proactive steps to protect their property, and a number of other issues need to be addressed. This problem is not going to go away, and it's not going to be solved simply by insurance or government support of insurance carriers.
As always, for more information on flood insurance and homeowners insurance on Long Island, visit our sites at www.NYInsuranceWithService.com and www.FloodInsuranceNY.com.
This time it's a carrier who specialized in waterfront property, and rather than make a decision to gradually lower their concentration of customers on Long Island for home insurance, as Allstate did, this company was put into receivership by the Texas Department of Insurance and was required to cancel ALL their policies in New York as of August 24, 2006.
The company, Vesta Insurance otherwise known as Shelby Casualty was a relative newcomer, having only entered the home insurance market in the past few years. But almost all their policies were for homes right on the water, and so between that and the fact that they all are running out the same day, it's been hectic for all agents trying to find other carriers. About 8600 homeowners insurance policies were affected.
On the plus side, recent analysis of weather patterns now suggests that we may NOT be in for a more active storm year than usual, and that the chances of a Katrina-sized storm hitting us this year may actually be lower than normal. This is good news, but it still does not mean that there is NO chance, and it looks like when (not if) such a storm does hit, the dislocation in the Long Island insurance market is going to be tremendous.
Meanwhile there was a good opinion piece in this past Sunday's Newsday considering whether hurricane/windstorm needs to be put in the same category as flood insurance, unemployment, and several other key types of insurance that are considered potentially so large that only the government has the resources to assume the risk, based on their taxing power.
This article is fine as far as it goes, though it does not get into the fact that building codes also need to be changed, people need to take proactive steps to protect their property, and a number of other issues need to be addressed. This problem is not going to go away, and it's not going to be solved simply by insurance or government support of insurance carriers.
As always, for more information on flood insurance and homeowners insurance on Long Island, visit our sites at www.NYInsuranceWithService.com and www.FloodInsuranceNY.com.
Tuesday, August 1, 2006
Scary Stuff
Well, back to our ongoing discussion about the Long Island and New York homeowners and flood insurance situation, and hurricanes in general. CBS News has an article today in their online version that has some scary information. Check it out here. I didn't realize that because of various geographic and weather issues, it would not take a category 4 or 5 storm, only a category 3 to really do some major damage to our area.
I live 2 blocks south of Sunrise Highway, and I bought flood insurance a couple of weeks ago. Coverage in those areas that are not considered high hazard is reasonably priced ($352 for the FEMA maximum of $250,000 on the structure and $100,000 on contents) and it's worth it for the peace of mind.
The one thing this article really points out is that the insurance companies, municipalities, and residents are basically in denial and are using the 'keep your fingers crossed' method of preparing for the inevitable. It might not happen this year, or next, but at some point it will.
I live 2 blocks south of Sunrise Highway, and I bought flood insurance a couple of weeks ago. Coverage in those areas that are not considered high hazard is reasonably priced ($352 for the FEMA maximum of $250,000 on the structure and $100,000 on contents) and it's worth it for the peace of mind.
The one thing this article really points out is that the insurance companies, municipalities, and residents are basically in denial and are using the 'keep your fingers crossed' method of preparing for the inevitable. It might not happen this year, or next, but at some point it will.
Monday, July 31, 2006
New Topic - Vacation Car Rentals
This week we will take another break from talking about the Long Island homeowners and flood insurance situation and talking a little about a question we still get a lot at our office. That would be the one about what insurance you have to buy from the rental company when you go on vacation and rent a car.
A number of years ago, in response to car rental companies trying to add $10-20 per day onto the cost of a rental vehicle through things like 'collision damage waiver', the State of New York came up with mandatory coverage to be included on every New York car insurance policy so that NY residents would not have to pay the extra charges.
So now, every New York auto insurance policy contains a 'rental vehicle coverage endorsement' providing coverage for actual damage to or loss of a rental vehicle. The coverage extents to rental of a passenger car, station wagon, van, or pickup, anywhere in the U.S., its territories or possessions, and Canada. So right away, note that coverage does NOT apply to a truck larger than a regular van or pickup, such as the type you might rent from U-Haul to move your stuff, for example. And coverage does NOT apply to rentals in Europe or anywhere outside the U.S. and Canada.
Note that the coverage specifically DOES apply to 'loss of use' of the rental vehicle. That means that if you have an accident, and the rental company loses 3 weeks worth of rental income while the car is repaired, that loss is also covered. That's because once the rental companies lost the extra daily rental charge, they tried to come up with other things to add on that were not covered under the NY auto policy. So the state included additional coverage.
Please note that you must read your own policy and/or talk to your insurance agent to make sure your policy has the exact same wording, but basically on something like this where it's required by the State, the wording has to match the State standards and so should be standard. So when you rent a car on vacation, and comply with the restrictions set out in your policy, the bottom line is that you do NOT have to buy any extra insurance for the damage to the rental car.
For more info on this or any of your other insurance questions, please feel free to contact us through our web site at www.NYInsuranceWithService.com.
A number of years ago, in response to car rental companies trying to add $10-20 per day onto the cost of a rental vehicle through things like 'collision damage waiver', the State of New York came up with mandatory coverage to be included on every New York car insurance policy so that NY residents would not have to pay the extra charges.
So now, every New York auto insurance policy contains a 'rental vehicle coverage endorsement' providing coverage for actual damage to or loss of a rental vehicle. The coverage extents to rental of a passenger car, station wagon, van, or pickup, anywhere in the U.S., its territories or possessions, and Canada. So right away, note that coverage does NOT apply to a truck larger than a regular van or pickup, such as the type you might rent from U-Haul to move your stuff, for example. And coverage does NOT apply to rentals in Europe or anywhere outside the U.S. and Canada.
Note that the coverage specifically DOES apply to 'loss of use' of the rental vehicle. That means that if you have an accident, and the rental company loses 3 weeks worth of rental income while the car is repaired, that loss is also covered. That's because once the rental companies lost the extra daily rental charge, they tried to come up with other things to add on that were not covered under the NY auto policy. So the state included additional coverage.
Please note that you must read your own policy and/or talk to your insurance agent to make sure your policy has the exact same wording, but basically on something like this where it's required by the State, the wording has to match the State standards and so should be standard. So when you rent a car on vacation, and comply with the restrictions set out in your policy, the bottom line is that you do NOT have to buy any extra insurance for the damage to the rental car.
For more info on this or any of your other insurance questions, please feel free to contact us through our web site at www.NYInsuranceWithService.com.
Tuesday, July 18, 2006
insurance- insurance industry
There are many great Insurance resources available. Including the Independent Insurance Agents and Brokers Association.
According to their site "The nation's oldest and largest national association of independent insurance agents & brokers with more than 300,000 members
Professional Insurance Agents "The National Association of Professional Insurance Agents (PIA) represents independent Professional Insurance Agents in all 50 states, Puerto Rico and the District of Columbia. Our members are local Main Street Agents who serve their communities throughout America."
Insurance Institute for Highway Safety "
Insurance Information Institute:
insurance resources consumer oriented......
According to their site "The nation's oldest and largest national association of independent insurance agents & brokers with more than 300,000 members
Professional Insurance Agents "The National Association of Professional Insurance Agents (PIA) represents independent Professional Insurance Agents in all 50 states, Puerto Rico and the District of Columbia. Our members are local Main Street Agents who serve their communities throughout America."
Insurance Institute for Highway Safety "
The Insurance Institute for Highway Safety is an independent, nonprofit, scientific and educational organization dedicated to reducing the losses — deaths, injuries, and property damage — from crashes on the nation's highways.
The Highway Loss Data Institute's mission is to compute and publish insurance loss results by make and model. Both organizations are wholly supported by auto insurers."Insurance Information Institute:
insurance resources consumer oriented......
insurance- insurance industry
There are many great Insurance resources available. Including the Independent Insurance Agents and Brokers Association.
According to their site "The nation's oldest and largest national association of independent insurance agents & brokers with more than 300,000 members
Professional Insurance Agents "The National Association of Professional Insurance Agents (PIA) represents independent Professional Insurance Agents in all 50 states, Puerto Rico and the District of Columbia. Our members are local Main Street Agents who serve their communities throughout America."
Insurance Institute for Highway Safety "
Insurance Information Institute:
insurance resources consumer oriented......
According to their site "The nation's oldest and largest national association of independent insurance agents & brokers with more than 300,000 members
Professional Insurance Agents "The National Association of Professional Insurance Agents (PIA) represents independent Professional Insurance Agents in all 50 states, Puerto Rico and the District of Columbia. Our members are local Main Street Agents who serve their communities throughout America."
Insurance Institute for Highway Safety "
The Insurance Institute for Highway Safety is an independent, nonprofit, scientific and educational organization dedicated to reducing the losses — deaths, injuries, and property damage — from crashes on the nation's highways.
The Highway Loss Data Institute's mission is to compute and publish insurance loss results by make and model. Both organizations are wholly supported by auto insurers."Insurance Information Institute:
insurance resources consumer oriented......
Saturday, July 15, 2006
First 'Wind vs. Flood' Insurance Lawsuits from Katrina
Well, we knew it was coming, but the first lawsuit against insurance companies resulting from the denial of Katrina claims has started. Unfortunately, most people did not have flood insurance, either because they felt they were protected by the levee system (those people may have a legitimate beef with the Army Corps of Engineers or others, in thinking the levees should have worked) or they thought they were far enough from the water to be safe.
In the recent flooding in some upstate New York counties, it has been estimated that only one per cent of the people had flood insurance. If you live in a mountainous area, it's hard to imagine needing flood insurance, but FEMA estimates that 25% of all flood claims come from areas that are NOT considered 'special flood hazard areas.'
Here on Long Island, and especially in Suffolk County (the further east you go, the more Long Island is considered vulnerable to hurricanes and other such big storms) we have a slightly different situation for those right down by the water. Since most homes have been built or in some way refinanced over the past 35 years (since the National Flood Insurance Program started), most have been required by their banks to carry both wind (homeowners insurance) and flood insurance. Many people should probably review their limits to be sure they are enough, but there is a lot of flood insurance in force near the South Shore.
Move a few blocks north of the water, however, and the situation is quite different. That's where the flood zones change to something other than 'A', and the banks have, until now, not been mandated to require flood insurance. That is all about to change as congress works on the 2006 Flood Insurance Act which will change the whole system to require more participation based on what happened with Katrina.
A few weeks ago Newsday published a map that clearly shows what our Emergency Preparedness people have been telling us for a long time. Based on elevation (facts, not guesses), water from a hurricane the size of Katrina would bring flooding past Sunrise Highway in many places, and certainly much further from the shore than has been seen in the memories of most of us.
Still, flood insurance in those Long Island areas outside the hazard zones can be as little as $352 (even less for a house on a slab), so many people are buying it anyway, since it seems a small price for a lot of peace of mind.
As always, for more info on flood insurance, visit our site at www.FloodInsuranceNY.com.
In the recent flooding in some upstate New York counties, it has been estimated that only one per cent of the people had flood insurance. If you live in a mountainous area, it's hard to imagine needing flood insurance, but FEMA estimates that 25% of all flood claims come from areas that are NOT considered 'special flood hazard areas.'
Here on Long Island, and especially in Suffolk County (the further east you go, the more Long Island is considered vulnerable to hurricanes and other such big storms) we have a slightly different situation for those right down by the water. Since most homes have been built or in some way refinanced over the past 35 years (since the National Flood Insurance Program started), most have been required by their banks to carry both wind (homeowners insurance) and flood insurance. Many people should probably review their limits to be sure they are enough, but there is a lot of flood insurance in force near the South Shore.
Move a few blocks north of the water, however, and the situation is quite different. That's where the flood zones change to something other than 'A', and the banks have, until now, not been mandated to require flood insurance. That is all about to change as congress works on the 2006 Flood Insurance Act which will change the whole system to require more participation based on what happened with Katrina.
A few weeks ago Newsday published a map that clearly shows what our Emergency Preparedness people have been telling us for a long time. Based on elevation (facts, not guesses), water from a hurricane the size of Katrina would bring flooding past Sunrise Highway in many places, and certainly much further from the shore than has been seen in the memories of most of us.
Still, flood insurance in those Long Island areas outside the hazard zones can be as little as $352 (even less for a house on a slab), so many people are buying it anyway, since it seems a small price for a lot of peace of mind.
As always, for more info on flood insurance, visit our site at www.FloodInsuranceNY.com.
Thursday, July 6, 2006
Hilary Confused about Homeowners vs. Flood?
Well, I never had any doubts that it is very common among the average 'person on the street' to be somewhat confused about just what is covered under homeowners insurance as opposed to FEMA's National Flood Insurance Program. But I would have hoped that a U.S. Senator and Presidential hopeful would have been able to get better information.
Hilary Clinton was touring some of the flood-ravaged areas of upstate New York recently, and took the opportunity to call on Allstate Insurance Company to reconsider their position of not writing new flood insurance policies on Long Island and other downstate areas, along with the cancellation of tens of thousands of existing policies. (Note that 'flood' in that case was her word, not ours)
Unfortunately, the flood damage she was looking at would ONLY have been covered under flood insurance policies issued by the National Flood Insurance program! While it's great that she is advocating on behalf of us here on Long Island and other areas that are prone to hurricane damage, Allstate would not be the culprit here, nor would they be the problem if we had major flooding here on the South Shore or anywhere else for that matter.
According to the article in National Underwriter magazine, Mrs. Clinton stated more than once that it's a shame that Allstate is no longer willing to provide flood insurance to their customers in Long Island, NYC, and Westchester. This kind of misinformation can only add to all the confusion and problems currently surrounding the market for coastal homeowners insurance.
Unfortunately, from what I have read, only about 1% of the people affected by last week's flooding actually carried flood insurance. That's most likely because they live in mountainous areas and would never have expected floods. But here on Long Island, and specifically on the South Shore, you need both a homeowners insurance policy AND a flood insurance policy if you want to be properly protected.
As always, for more information, please visit our web sites at www.nyinsurancewithservice.com and www.floodinsuranceny.com
Hilary Clinton was touring some of the flood-ravaged areas of upstate New York recently, and took the opportunity to call on Allstate Insurance Company to reconsider their position of not writing new flood insurance policies on Long Island and other downstate areas, along with the cancellation of tens of thousands of existing policies. (Note that 'flood' in that case was her word, not ours)
Unfortunately, the flood damage she was looking at would ONLY have been covered under flood insurance policies issued by the National Flood Insurance program! While it's great that she is advocating on behalf of us here on Long Island and other areas that are prone to hurricane damage, Allstate would not be the culprit here, nor would they be the problem if we had major flooding here on the South Shore or anywhere else for that matter.
According to the article in National Underwriter magazine, Mrs. Clinton stated more than once that it's a shame that Allstate is no longer willing to provide flood insurance to their customers in Long Island, NYC, and Westchester. This kind of misinformation can only add to all the confusion and problems currently surrounding the market for coastal homeowners insurance.
Unfortunately, from what I have read, only about 1% of the people affected by last week's flooding actually carried flood insurance. That's most likely because they live in mountainous areas and would never have expected floods. But here on Long Island, and specifically on the South Shore, you need both a homeowners insurance policy AND a flood insurance policy if you want to be properly protected.
As always, for more information, please visit our web sites at www.nyinsurancewithservice.com and www.floodinsuranceny.com
Wednesday, June 28, 2006
Comments on Newsday Column
I'm taking a break from the issues surrounding the hurricane threat and it's effect on Long Island homeowners and flood insurance to talk about another area that is making our lives more interesting these days. It's another issue that is causing homeowners insurance policies to be canceled or restricted and is only going to get worse.
This morning's Newsday had a column by Ellis Henican entitled 'Hey Grownups! Stop stealing fun from our kids'. It talks about things like the disappearance of diving boards for home pools, changes in playground equipment in the name of safety, and the like. I enjoy his writing and he is, to a great extent, on the mark here. And I give him credit for NOT taking it as an opportunity to bash the insurance industry, which is part of the reason some of this stuff is disappearing.
The insurance industry was a major influence in the 1960's when car manufacturers were forced to stop building 'muscle cars' because of injuries and lawsuits. Cars are faster now than they were in the Sixties, but with air bags, anti-lock brakes, and other improvements, they are much safer too.
The key word in the above is LAWSUITS! We are the most lawsuit-crazy country in the world, and in particular, the corridor from Washington, D.C to Boston is just out of control. Every time someone injures themselves, whether it's spilling hot coffee in their lap or cutting themselves while illegally breaking in to a school, there is a lawsuit, and claims get paid. All you have to do is turn on some late night TV, and you will be sure to find some attorney saying 'if you've been hurt any time for any reason, call 1-800-FRIVOLOUS and we will get you some money.
To give you a further example, I am very active in the service group Rotary International. Clubs in our part of the world were asking the parent organization to provide a type of insurance known as Directors and Officers coverage, which has to do with being sued for not doing your proper job as a Director or officer of the group. They advised that we would have to purchase it ourselves, because the Northeast U.S. is the ONLY place in the world (ok, maybe California too) where people will sue charitable organizations and volunteers for this sort of thing, and they could not justify making clubs all over the world contribute to it.
Long Island homeowners insurance carriers, in addition to being worried about hurricanes, flooding, and the like, have started to crack down on trampolines, certain breeds of dogs, and other areas. Every time a dog nips someone, there is a lawsuit, and most times a payment. With trampolines and diving boards, and other things cited in the Newsday column, the problem is that nobody takes any responsibility for their own actions. We have been conditioned that there is always somebody to blame, and that money helps.
As always, for more information or assistance with a homeowners, flood, or any type of insurance question, visit our web site at www.NYInsuranceWithService.com.
This morning's Newsday had a column by Ellis Henican entitled 'Hey Grownups! Stop stealing fun from our kids'. It talks about things like the disappearance of diving boards for home pools, changes in playground equipment in the name of safety, and the like. I enjoy his writing and he is, to a great extent, on the mark here. And I give him credit for NOT taking it as an opportunity to bash the insurance industry, which is part of the reason some of this stuff is disappearing.
The insurance industry was a major influence in the 1960's when car manufacturers were forced to stop building 'muscle cars' because of injuries and lawsuits. Cars are faster now than they were in the Sixties, but with air bags, anti-lock brakes, and other improvements, they are much safer too.
The key word in the above is LAWSUITS! We are the most lawsuit-crazy country in the world, and in particular, the corridor from Washington, D.C to Boston is just out of control. Every time someone injures themselves, whether it's spilling hot coffee in their lap or cutting themselves while illegally breaking in to a school, there is a lawsuit, and claims get paid. All you have to do is turn on some late night TV, and you will be sure to find some attorney saying 'if you've been hurt any time for any reason, call 1-800-FRIVOLOUS and we will get you some money.
To give you a further example, I am very active in the service group Rotary International. Clubs in our part of the world were asking the parent organization to provide a type of insurance known as Directors and Officers coverage, which has to do with being sued for not doing your proper job as a Director or officer of the group. They advised that we would have to purchase it ourselves, because the Northeast U.S. is the ONLY place in the world (ok, maybe California too) where people will sue charitable organizations and volunteers for this sort of thing, and they could not justify making clubs all over the world contribute to it.
Long Island homeowners insurance carriers, in addition to being worried about hurricanes, flooding, and the like, have started to crack down on trampolines, certain breeds of dogs, and other areas. Every time a dog nips someone, there is a lawsuit, and most times a payment. With trampolines and diving boards, and other things cited in the Newsday column, the problem is that nobody takes any responsibility for their own actions. We have been conditioned that there is always somebody to blame, and that money helps.
As always, for more information or assistance with a homeowners, flood, or any type of insurance question, visit our web site at www.NYInsuranceWithService.com.
Thursday, June 22, 2006
Insurance Fraud Warnings Not Very Helpful?
The New York State insurance superintendent has sent out a 'public service announcement' sort of thing to try to warn the public against fraudulent insurance companies. It stems from the horrible boat accident last October when 20 people were killed on Lake George when a tour boat capsized. Here are several paragraphs from the article in National Underwriter and then I will add why I think this is not very helpful.
_________________________________
"New York ’s insurance superintendent has taken to the airwaves to warn consumers about fake insurance as his inquiry continues into a phony insurance operation that was exposed by a fatal accident, a spokesman said yesterday.
Superintendent Howard Mills announced he had distributed a video to television stations telling consumers how to protect themselves from being hurt by fake insurance companies.
The issue was spotlighted in New York on Oct. 2 when the Ethan Allen tour boat capsized on Lake George, killing 20 people, and it was revealed that the insurance purchased by the vessel’s operator was bogus." Quoted from a National Underwriter article, and here is a link to the full text.
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The problem I see here is that the 20 victims were not a party to the fraudulent insurance. They just got on a boat for a nice afternoon ride. I have tremendous respect for Insurance Superintendent Howard Mills, but does he expect that every time we walk into a building, ride in a bus, go on an amusement park ride, stay at a hotel, or whatever, we are going to do some sort of investigation as to the whether the owner has valid and sufficient insurance?? That would be virtually impossible! This is where our government is supposed to design and implement regulations in and for the public interest.
If the people on this boat had even thought of asking whether the boat owner carried proper insurance, at best he probably would have shown what he thought was a valid policy (since apparently they thought they had purchased valid coverage) and that would not have helped.
Yes it's good to be aware and alert to help fight fraud, but in this case there is not much the victims could have done, and I believe it's the regulatory system that could have done a better job.
_________________________________
"New York ’s insurance superintendent has taken to the airwaves to warn consumers about fake insurance as his inquiry continues into a phony insurance operation that was exposed by a fatal accident, a spokesman said yesterday.
Superintendent Howard Mills announced he had distributed a video to television stations telling consumers how to protect themselves from being hurt by fake insurance companies.
The issue was spotlighted in New York on Oct. 2 when the Ethan Allen tour boat capsized on Lake George, killing 20 people, and it was revealed that the insurance purchased by the vessel’s operator was bogus." Quoted from a National Underwriter article, and here is a link to the full text.
__________________________________
The problem I see here is that the 20 victims were not a party to the fraudulent insurance. They just got on a boat for a nice afternoon ride. I have tremendous respect for Insurance Superintendent Howard Mills, but does he expect that every time we walk into a building, ride in a bus, go on an amusement park ride, stay at a hotel, or whatever, we are going to do some sort of investigation as to the whether the owner has valid and sufficient insurance?? That would be virtually impossible! This is where our government is supposed to design and implement regulations in and for the public interest.
If the people on this boat had even thought of asking whether the boat owner carried proper insurance, at best he probably would have shown what he thought was a valid policy (since apparently they thought they had purchased valid coverage) and that would not have helped.
Yes it's good to be aware and alert to help fight fraud, but in this case there is not much the victims could have done, and I believe it's the regulatory system that could have done a better job.
Tuesday, June 20, 2006
Insurance Industry Developments
Like all businesses today, the insurance industry is facing constant changes and challenges. One day I might see a study of various potential catastrophes. The current 'really bad case' scenario predicts losses over $150 billion in some major act of terrorism (that's double the size of Katrina), and the next day it's the Federal government trying to get involved in the supervision of insurance companies, which right now is done by the states.
That last part might not seem like a big deal, but if you're a State Senator or other official, or a believer in a more conservative interpretation of the Constitution (our country, after all, is a union of states, where the Federal government is supposed to leave matters of commerce to the states except where it involves interstate activities, which much insurance often does not) then you are pretty actively protecting your turf in this sort of battle.
States' Rights has been a huge issue over the years, but on the other hand, technological advances like the Web and computers have made it harder and harder to argue against one uniform set of rules for everybody.
Just yesterday Congress passed a bill that will attempt to make uniform regulations, but for just one part of the industry at this time. In this case, that would be the Excess and Surplus market. Many people will never actually buy a policy in this sort of company, but the best known of them would be Lloyd's of London. It is a vibrant and active market where all kinds of interesting coverages can be bought and sold.
Another HUGE issue these days is reinsurance company financial strength and premium charges. As end consumers of insurance, we never see where the insurance companies go to by their insurance against the big losses, but they do it, nonetheless. And some of them were hit pretty hard in the past few years. Costs are expected to rise 50% or more in the next couple of years and the impact on our rates will be widespread.
That last part might not seem like a big deal, but if you're a State Senator or other official, or a believer in a more conservative interpretation of the Constitution (our country, after all, is a union of states, where the Federal government is supposed to leave matters of commerce to the states except where it involves interstate activities, which much insurance often does not) then you are pretty actively protecting your turf in this sort of battle.
States' Rights has been a huge issue over the years, but on the other hand, technological advances like the Web and computers have made it harder and harder to argue against one uniform set of rules for everybody.
Just yesterday Congress passed a bill that will attempt to make uniform regulations, but for just one part of the industry at this time. In this case, that would be the Excess and Surplus market. Many people will never actually buy a policy in this sort of company, but the best known of them would be Lloyd's of London. It is a vibrant and active market where all kinds of interesting coverages can be bought and sold.
Another HUGE issue these days is reinsurance company financial strength and premium charges. As end consumers of insurance, we never see where the insurance companies go to by their insurance against the big losses, but they do it, nonetheless. And some of them were hit pretty hard in the past few years. Costs are expected to rise 50% or more in the next couple of years and the impact on our rates will be widespread.
Tuesday, June 6, 2006
Panic Mode in Insurance Companies?
Apparently Allstate just announced that they will be dropping all earthquake coverage country-wide except for four states (Kentucky, Connecticut, Rhode Island, and Florida) where it is legally required, and they are in negotiations in those states! They currently write this coverage for over 400,000 homeowners.
Earthquake, of course, is another 'catastrophic' insurance coverage, meaning that it has the potential to affect a large number of properties in the same event. And since we have had relatively little earthquake activity in the past few decades, there has been a lot of building in areas that previously were considered dangerous because of underground faults. This is similar to all the building that has gone on near the coast during the last couple of decades when we were in a 'low' time for hurricane activity.
It seems that the industry is going into full panic mode. This is going to be an interesting couple of years for homeowners because once this sort of ball gets rolling, it's going to be hard to stop it. Although hurricane and earthquake clearly fall into the catastrophe classification, if you start 'massaging' the definitions, there are other coverages that could be questionable in the next round. War is already excluded, but terrorism is not, at least on privately owned dwellings. What else will they be able to think of?
In a strange way, this might actually help the Long Island and New York homeowners situation. One of the problems has been that the parts of the country that are not subject to hurricanes and flooding have been less than excited about programs such as the FEMA Flood Insurance to help those areas that are so exposed. If earthquake coverage also necessitates a government program, then we may find more support in general for things like government catastrophe backstops that are now being sought by the insurance carriers.
The other good thing that will eventually come of this is better building codes to reduce damage when the storm or other event does occur. Those take many years to implement, but they have to start sometime. As always, for more info on these or other issues, you can contact us through our web sites at www.NYInsuranceWithService.com and www.FloodInsuranceNY.com.
Earthquake, of course, is another 'catastrophic' insurance coverage, meaning that it has the potential to affect a large number of properties in the same event. And since we have had relatively little earthquake activity in the past few decades, there has been a lot of building in areas that previously were considered dangerous because of underground faults. This is similar to all the building that has gone on near the coast during the last couple of decades when we were in a 'low' time for hurricane activity.
It seems that the industry is going into full panic mode. This is going to be an interesting couple of years for homeowners because once this sort of ball gets rolling, it's going to be hard to stop it. Although hurricane and earthquake clearly fall into the catastrophe classification, if you start 'massaging' the definitions, there are other coverages that could be questionable in the next round. War is already excluded, but terrorism is not, at least on privately owned dwellings. What else will they be able to think of?
In a strange way, this might actually help the Long Island and New York homeowners situation. One of the problems has been that the parts of the country that are not subject to hurricanes and flooding have been less than excited about programs such as the FEMA Flood Insurance to help those areas that are so exposed. If earthquake coverage also necessitates a government program, then we may find more support in general for things like government catastrophe backstops that are now being sought by the insurance carriers.
The other good thing that will eventually come of this is better building codes to reduce damage when the storm or other event does occur. Those take many years to implement, but they have to start sometime. As always, for more info on these or other issues, you can contact us through our web sites at www.NYInsuranceWithService.com and www.FloodInsuranceNY.com.
Thursday, June 1, 2006
FEMA Flood Insurance - Extreme Makeover
Well, the issue of hurricanes hitting Long Island and the New York metropolitan area continues to make big news. There was another big article in today's Newsday talking about storm preparedness, and I just got an invite today to a big conference at the New York Hilton on July 19. Called the Northeast Hurricane Conference, they hope to bring together all the various parties - government, insurance, emergency personnel, and so on. The idea will be to try to get information out to everybody, including us everyday folks.
Meanwhile, in Washington D.C., both houses of Congress have passed different versions of a major FEMA Flood Insurance reform act. Now of course they need to have a conference committee to iron out differences, but there are going to be some major changes in the Federal Flood Insurance program (NFIP).
It will be no surprise to most folks, I'm sure, to find out that Katrina bankrupted the FEMA flood insurance program. It required an infusion from the U.S. Treasury of $23 billion (so far). And although Long Island gets great benefits from the program, I'm sure you can understand that the folks in places like Arizona and New Mexico feel that those who live in flood areas should pay for their own claims through the FEMA program, not be subsidized by those not in flood areas.
There are two fundamental ways to financially beef up the flood insurance system so it's better prepared for the inevitable future claims. You can get more money in, and pay less money out. So some changes will be designed to get more people to participate in the program through changes to the flood zone maps and through requirements in federally backed mortgages (which means most loans.) In other words, more people will be getting letters from their bank advising that they need flood insurance. The second part of the 'more money in' equation is higher rates, unfortunately.
On the 'less money out' side, we might see more restrictions of coverage on buildings that have had multiple losses in the past, less available coverage for vacation and second homes, enforcement of penalty clauses for underinsurance, and other possibilities.
I stress that these are all possibilities at this point, though most of them are in one or the other of the bills already passed by Congress. The only real question is exactly what form the final bill will take. There is no question that action will be taken on some bill.
Next time, we'll talk a little about Excess Flood Insurance, over and above the $250,000 maximum available under the FEMA program. That's going to be another big issue as banks wake up to the fact that many many homes on Long Island and in New York would cost many times that much to re-build after a flood.
As always, for more info, visit our website at www.FloodInsuranceNY.com
Meanwhile, in Washington D.C., both houses of Congress have passed different versions of a major FEMA Flood Insurance reform act. Now of course they need to have a conference committee to iron out differences, but there are going to be some major changes in the Federal Flood Insurance program (NFIP).
It will be no surprise to most folks, I'm sure, to find out that Katrina bankrupted the FEMA flood insurance program. It required an infusion from the U.S. Treasury of $23 billion (so far). And although Long Island gets great benefits from the program, I'm sure you can understand that the folks in places like Arizona and New Mexico feel that those who live in flood areas should pay for their own claims through the FEMA program, not be subsidized by those not in flood areas.
There are two fundamental ways to financially beef up the flood insurance system so it's better prepared for the inevitable future claims. You can get more money in, and pay less money out. So some changes will be designed to get more people to participate in the program through changes to the flood zone maps and through requirements in federally backed mortgages (which means most loans.) In other words, more people will be getting letters from their bank advising that they need flood insurance. The second part of the 'more money in' equation is higher rates, unfortunately.
On the 'less money out' side, we might see more restrictions of coverage on buildings that have had multiple losses in the past, less available coverage for vacation and second homes, enforcement of penalty clauses for underinsurance, and other possibilities.
I stress that these are all possibilities at this point, though most of them are in one or the other of the bills already passed by Congress. The only real question is exactly what form the final bill will take. There is no question that action will be taken on some bill.
Next time, we'll talk a little about Excess Flood Insurance, over and above the $250,000 maximum available under the FEMA program. That's going to be another big issue as banks wake up to the fact that many many homes on Long Island and in New York would cost many times that much to re-build after a flood.
As always, for more info, visit our website at www.FloodInsuranceNY.com
Thursday, May 25, 2006
The Latest on Long Island Homeowners and Flood Insurance
Yesterday we had our regular monthly meeting of the Suffolk County Independent Insurance Agents Association. It's a great group of men and women with an extraordinary amount of knowledge and desire to do the best for their clients. The Suffolk board is known throughout the State for being one of the most proactive and thoughtful. You can see more about our activities at www.suffolkagents.com, including our bi-monthly newsletter, which I publish. The articles are written by various members on a rotating basis and cover a wide range of topics.
Yesterday we heard about efforts in the State Legislature to make the New York Property Insurance Underwriting Association (NYPIUA) permanent. NYPIUA is basically a state-owned and operated insurance company that is the carrier of last resort for fire and wind insurance. Most of the homes on Fire Island have come to be insured there, though there has been much movement away from them because coverage is limited, and folks have been building those huge houses over there. Properties in blighted city areas have also made use of NYPIUA.
The problem is that the whole operation is treated as a political football by the legislature. They renew it year by year, or for two years, even though most of them know absolutely that they can't let it run out. Usually it does actually expire at each renewal, as the State Senators horse-trade for votes on other issues. The problem is that NYPIUA is mostly used downstate in city and coastal areas, so the upstate legislators hold their votes hostage to things that they want their downstate counterparts to vote for. It is a bad situation, and it is being made much worse by the current insurance problems.
We also heard about another insurance carrier, a small one this time, who is taking action to cancel all their homeowners policies south of Sunrise Highway, and closing up for new business. As has been said here before, this whole thing is going to get worse before it gets better, unfortunately.
Yesterday we heard about efforts in the State Legislature to make the New York Property Insurance Underwriting Association (NYPIUA) permanent. NYPIUA is basically a state-owned and operated insurance company that is the carrier of last resort for fire and wind insurance. Most of the homes on Fire Island have come to be insured there, though there has been much movement away from them because coverage is limited, and folks have been building those huge houses over there. Properties in blighted city areas have also made use of NYPIUA.
The problem is that the whole operation is treated as a political football by the legislature. They renew it year by year, or for two years, even though most of them know absolutely that they can't let it run out. Usually it does actually expire at each renewal, as the State Senators horse-trade for votes on other issues. The problem is that NYPIUA is mostly used downstate in city and coastal areas, so the upstate legislators hold their votes hostage to things that they want their downstate counterparts to vote for. It is a bad situation, and it is being made much worse by the current insurance problems.
We also heard about another insurance carrier, a small one this time, who is taking action to cancel all their homeowners policies south of Sunrise Highway, and closing up for new business. As has been said here before, this whole thing is going to get worse before it gets better, unfortunately.
Wednesday, May 17, 2006
Homeowners Insurance Actions in Florida
Today State Farm Insurance Company announced rate increase requests averaging over 70% in the state of Florida, with requests of over 200% in some areas! The bulk of this increase is likely to be approved according to National Underwriter, an industry magazine. Allstate has taken a different approach, arranging with several smaller insurance companies to take 200,000 of their customers off their hands for homeowners insurance.
As I have indicated in previous columns, there is no one solution to this issue and so creativity and innovation is called for.
As I have indicated in previous columns, there is no one solution to this issue and so creativity and innovation is called for.
Monday, May 15, 2006
There is a lot of concern today because of all the rain that is expected in the New England area, according to this morning’s NY Times (http://www.nytimes.com/). The market for Long Island homeowners insurance was already in panic mode because of the storms that are being predicted.
Last fall we had all those rains which caused hydrostatic pressure to build up and filled thousands of Long Island basements with water, and much of that was not covered by EITHER flood insurance or homeowners insurance.The question most folks have is ‘why?’ Why was that sort of water damage not covered? Isn’t that a flood, when your basement has 24 inches of water in it?
The answer, at least for the purposes of the National Flood Insurance Program (NFIP) is that it’s not. For one thing, most of that water was ground water that seeped in through the foundation. For another, a lot of it happened a good distance from ‘the water’ as most people think of it, and so even in cases where it might have been covered, they were not carrying flood insurance. That may change soon as FEMA examines ways to increase participation in the National Flood Insurance Program.
So what IS a flood? Here is a basic definition from FEMA via their official flood insurance info site, http://www.floodsmart.gov - "A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder's property) from:
• Overflow of inland or tidal waters; or
• Unusual and rapid accumulation or runoff of surface waters from any source; or Mudflow; or
• Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above."
So, in plain English, a flood is an excess of water (or mud) on land that's normally dry.Floods often happen when bodies of water overflow or tides rise due to heavy rainfall or thawing snow.But you don't have to live near water to be at risk of flooding. A flash flood, which can strike anywhere without warning, occurs when a large volume of rain falls within a short time.More and more buildings, roads and parking lots are being built where forests and meadows used to be, which decreases the land's natural ability to absorb water. Coupled with changing weather patterns, this construction has made recent floods more severe and increased everyone's chance of being flooded.
For more info on flood insurance in New York visit the FEMA sight above or our site at http://www.floodinsuranceny.com/.
Last fall we had all those rains which caused hydrostatic pressure to build up and filled thousands of Long Island basements with water, and much of that was not covered by EITHER flood insurance or homeowners insurance.The question most folks have is ‘why?’ Why was that sort of water damage not covered? Isn’t that a flood, when your basement has 24 inches of water in it?
The answer, at least for the purposes of the National Flood Insurance Program (NFIP) is that it’s not. For one thing, most of that water was ground water that seeped in through the foundation. For another, a lot of it happened a good distance from ‘the water’ as most people think of it, and so even in cases where it might have been covered, they were not carrying flood insurance. That may change soon as FEMA examines ways to increase participation in the National Flood Insurance Program.
So what IS a flood? Here is a basic definition from FEMA via their official flood insurance info site, http://www.floodsmart.gov - "A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder's property) from:
• Overflow of inland or tidal waters; or
• Unusual and rapid accumulation or runoff of surface waters from any source; or Mudflow; or
• Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above."
So, in plain English, a flood is an excess of water (or mud) on land that's normally dry.Floods often happen when bodies of water overflow or tides rise due to heavy rainfall or thawing snow.But you don't have to live near water to be at risk of flooding. A flash flood, which can strike anywhere without warning, occurs when a large volume of rain falls within a short time.More and more buildings, roads and parking lots are being built where forests and meadows used to be, which decreases the land's natural ability to absorb water. Coupled with changing weather patterns, this construction has made recent floods more severe and increased everyone's chance of being flooded.
For more info on flood insurance in New York visit the FEMA sight above or our site at http://www.floodinsuranceny.com/.
Wednesday, May 10, 2006
Long Island Homeowners Insurance, the Saga Continues
There’s a lot going on these days in the New York and Long Island homeowners insurance market. One of the insurance agents associations says they are aware of another major insurance company making plans to take some drastic actions on Long Island. On the other hand, efforts are being made to bring more companies into the area to help people get their cancelled insurance policies replaced. It almost has to be new companies who have not been here before in any major way, because that’s the only way to spread it out more.
Taking an active role in that effort and more has been New York State Insurance Commissioner Howard Mills. I’m not into politics, but this guy really seems to have a great depth of knowledge about what has to happen, and is working very hard on it. There is action in the State Legislature to address the problem of too many homeowners insurance policies being cancelled in one area. Meanwhile he is reaching out to other states to see if some carriers not currently writing New York homeowners insurance can be persuaded to join the fray.
I heard yesterday that he is planning some news conferences to encourage people, among other things, to buy flood insurance for their homes. Federal Flood Insurance covers different damage from homeowners insurance, but still is important to stabilizing the overall situation.
One of the problems happening in Mississippi and Louisiana right now is that people are suing the major homeowners insurance carriers to try to make them cover flood damage. Homeowners insurance clearly excludes flooding as defined by the standard flood insurance policy, specifically to make it clear that the two policies cover different things. But you can’t necessarily rely on a reasonable court finding when they perceive that the insurance companies have plenty of money and the poor people don’t have homes.
So homeowners insurance carriers on Long Island will feel more comfortable if more folks have flood insurance, even if they are not right on the water. The weather and disaster experts have said that if Katrina hit Long Island, water would reach Sunrise Highway. That covers an awful lot of homes that are not ‘on the water’.
More to come. In the meantime if you want more info on Long Island flood insurance you can visit the FEMA site for the National Flood Insurance Program at www.floodsmart.gov or our site at www.FloodInsuranceNY.com.
Taking an active role in that effort and more has been New York State Insurance Commissioner Howard Mills. I’m not into politics, but this guy really seems to have a great depth of knowledge about what has to happen, and is working very hard on it. There is action in the State Legislature to address the problem of too many homeowners insurance policies being cancelled in one area. Meanwhile he is reaching out to other states to see if some carriers not currently writing New York homeowners insurance can be persuaded to join the fray.
I heard yesterday that he is planning some news conferences to encourage people, among other things, to buy flood insurance for their homes. Federal Flood Insurance covers different damage from homeowners insurance, but still is important to stabilizing the overall situation.
One of the problems happening in Mississippi and Louisiana right now is that people are suing the major homeowners insurance carriers to try to make them cover flood damage. Homeowners insurance clearly excludes flooding as defined by the standard flood insurance policy, specifically to make it clear that the two policies cover different things. But you can’t necessarily rely on a reasonable court finding when they perceive that the insurance companies have plenty of money and the poor people don’t have homes.
So homeowners insurance carriers on Long Island will feel more comfortable if more folks have flood insurance, even if they are not right on the water. The weather and disaster experts have said that if Katrina hit Long Island, water would reach Sunrise Highway. That covers an awful lot of homes that are not ‘on the water’.
More to come. In the meantime if you want more info on Long Island flood insurance you can visit the FEMA site for the National Flood Insurance Program at www.floodsmart.gov or our site at www.FloodInsuranceNY.com.
Saturday, May 6, 2006
Flood Insurance Facts and Myths
This week we will take a little break from our discussion of the Long Island homeowners insurance crisis, and talk a bit about the other type of coverage that is very important if a hurricane hits Long Island, flood insurance. Standard insurance companies long ago decided that they could not provide coverage for flood because it is catastrophic in nature, in other words, it can cause large amounts of damage to large numbers of property all at once.
The big insurance carriers are not afraid of a fire, which might affect two or three homes, or a large building. But a flood that wipes out the entire South Shore of Long Island could put all the insurance companies out of business, as losses could easily reach hundreds of billions of dollars.
So about 40 years ago the Federal Emergency Management Agency (FEMA) was charged with designing a program for flood insurance. That was the beginning of the National Flood Insurance Program (NFIP). The idea was that loss payments would be guaranteed by the Federal flood insurance program but would be sold and serviced by both the NFIP itself and other insurance carriers who would be paid a fee for each policy they administer. Coverage is sold through local agents who choose to participate.
Communities were invited to join the NFIP flood insurance program in the late 1960's/early 1970's. As part of the requirements for joining, they had to agree to various changes in their building codes so that homes built after the date they came in to the program would be elevated beyond the 100 year flood plain level, meaning they would be much less likely to be damaged in a flood unless it was a really bad one. In return, those homes in flood hazard areas which are properly elevated get a much lower rate for their flood insurance.
All land areas are divided into flood insurance zones based on the ground elevation where they are. Naturally, the general tendency is that as you move away from the water, the hazard drops. However, it has been estimated by a number of experts that if a category 3 or better hurricane, such as Katrina, were to make a direct hit on Long Island, the water would reach Sunrise Highway in most areas, because the ground doesn't really start to rise until a few miles in.
The good news is that most homes more than a few blocks from the water are in what's called non-flood hazard areas, and flood insurance is pretty cheap for them. But near the water, and even moreso over on the barrier islands (where houses are not really damaged by floods as much as they are completely swept away) flood coverage can be fairly expensive. Our office writes a fair number of flood insurance policies for people on Gilgo Beach, Oak Beach, and Fire Island, and each one is individually rated by the flood insurance carriers based on location, elevation, and more.
Many people were required to buy flood insurance for the first time only in the past few years. As the mortgage refinancing and home equity loan boom happened over the past 5-7 years, with many homes being sold and many more seeing their equity taken out in the form of home equity loans and lines of credit, people learned something interesting about flood insurance. Since it's a federal government program, and the federal government also guarantees mortgages through the Federal National Mortgage Agency (FNMA or Fannie Mae) and GNMA (Ginny Mae), they also REQUIRE the purchase of federal flood insurance for homes in flood hazard areas. This puts more money into the National Flood Insurance Program through increased participation.
More to come in our next post.
The big insurance carriers are not afraid of a fire, which might affect two or three homes, or a large building. But a flood that wipes out the entire South Shore of Long Island could put all the insurance companies out of business, as losses could easily reach hundreds of billions of dollars.
So about 40 years ago the Federal Emergency Management Agency (FEMA) was charged with designing a program for flood insurance. That was the beginning of the National Flood Insurance Program (NFIP). The idea was that loss payments would be guaranteed by the Federal flood insurance program but would be sold and serviced by both the NFIP itself and other insurance carriers who would be paid a fee for each policy they administer. Coverage is sold through local agents who choose to participate.
Communities were invited to join the NFIP flood insurance program in the late 1960's/early 1970's. As part of the requirements for joining, they had to agree to various changes in their building codes so that homes built after the date they came in to the program would be elevated beyond the 100 year flood plain level, meaning they would be much less likely to be damaged in a flood unless it was a really bad one. In return, those homes in flood hazard areas which are properly elevated get a much lower rate for their flood insurance.
All land areas are divided into flood insurance zones based on the ground elevation where they are. Naturally, the general tendency is that as you move away from the water, the hazard drops. However, it has been estimated by a number of experts that if a category 3 or better hurricane, such as Katrina, were to make a direct hit on Long Island, the water would reach Sunrise Highway in most areas, because the ground doesn't really start to rise until a few miles in.
The good news is that most homes more than a few blocks from the water are in what's called non-flood hazard areas, and flood insurance is pretty cheap for them. But near the water, and even moreso over on the barrier islands (where houses are not really damaged by floods as much as they are completely swept away) flood coverage can be fairly expensive. Our office writes a fair number of flood insurance policies for people on Gilgo Beach, Oak Beach, and Fire Island, and each one is individually rated by the flood insurance carriers based on location, elevation, and more.
Many people were required to buy flood insurance for the first time only in the past few years. As the mortgage refinancing and home equity loan boom happened over the past 5-7 years, with many homes being sold and many more seeing their equity taken out in the form of home equity loans and lines of credit, people learned something interesting about flood insurance. Since it's a federal government program, and the federal government also guarantees mortgages through the Federal National Mortgage Agency (FNMA or Fannie Mae) and GNMA (Ginny Mae), they also REQUIRE the purchase of federal flood insurance for homes in flood hazard areas. This puts more money into the National Flood Insurance Program through increased participation.
More to come in our next post.
Thursday, May 4, 2006
Kentucky Insurance Mine Subsidence
Kentucky Insurance Mine Subsidence Fund Lowered Premium
More Information from Insurance Journal
A decrease in the rates charged to consumers living in Kentucky counties that participate in the Kentucky Mine Subsidence Insurance Fund has been announced by the Kentucky Office of Insurance in Frankfort, Ky. Due to this action, consumers in 34 Kentucky counties will see a decrease in their homeowners insurance premiums beginning this month......
More Information from Insurance Journal
Kentucky Insurance Mine Subsidence
Kentucky Insurance Mine Subsidence Fund Lowered Premium
More Information from Insurance Journal
A decrease in the rates charged to consumers living in Kentucky counties that participate in the Kentucky Mine Subsidence Insurance Fund has been announced by the Kentucky Office of Insurance in Frankfort, Ky. Due to this action, consumers in 34 Kentucky counties will see a decrease in their homeowners insurance premiums beginning this month......
More Information from Insurance Journal
homes located in Kentucky
for more information about Kentucky Homes you may want to visit this great blog Kentucky Homes A great resource for Kentucky Home buyers.
homes located in Kentucky
for more information about Kentucky Homes you may want to visit this great blog Kentucky Homes A great resource for Kentucky Home buyers.
Wednesday, May 3, 2006
Buying your first Home
Buying your first home in Kentucky,
Here is a great outline of the steps involved in buying your first home:
Here is a great outline of the steps involved in buying your first home:
"It’s a big decision to make, the jump from renter to homeowner. Being able to own a home comes with many rewards — equity buildup, tax advantages and, of course, having something you can call your very own.
When you’re considering buying, it’s a good idea to pick a real estate agent to help.
“We will offer some insight on how the real estate process works,” said Scott Johnston, president of the Aberdeen, S.D., Board of Realtors.
It’s important to let your real estate agent know exactly what you’re looking for in a property -- whether it’s a two-car garage, a finished basement, an updated kitchen or a big back yard. An agent can also help you make informed decisions about the neighborhood you are considering, the quality of the schools, taxes, traffic volume and more.
Another advantage to obtaining a real estate agent’s service is that he or she has immediate access to homes as soon as they are put on the market.
GET PRE-APPROVED
Before you start looking, get pre-approved by a lender you trust. Getting pre-approved by your lender’s mortgage specialist will help you zero in on a price range. Also, if there are any credit blemishes, they can be addressed at the early stages of the process.
There are several types of mortgages available.
A popular example is a fixed-rate mortgage. In a fixed-rate mortgage, your interest rate stays the same for the term of the mortgage. There are no surprises with a fixed-rate mortgage - a borrower always knows exactly how much his or her mortgage payment will be.
With an adjustable rate mortgage, your rate and payment can change either up or down, as often as once or twice a year. The advantage is that you may be able to afford a more expensive home because your initial interest rate will start out lower.
MONTHLY PAYMENTS
Buyers must also be aware that their payment will not only reflect the principal and interest that was borrowed, but will also include an escrow payment for real state tax, homeowners insurance and PMI. (PMI is a financial guaranty that protects lenders against loss in the event that a borrower defaults. A premium is paid by the borrower and is included in the mortgage payment.)
Depending on the location of your home, you might have to include flood insurance and association dues.
Remember that during the life of the loan, you’ll pay far more in interest than you will in principal. Because of the way loans are structured, in the first years you’ll be paying mostly interest in your monthly payments.
MAKING AN OFFER
If you make an offer on a home and your offer is rejected, don’t feel defeated — keep negotiating. It’s normal for it to be a back-and-forth process. If an appraisal comes in too low, don’t worry — it just offers up another opportunity to negotiate.
EARNEST MONEY
When you make an offer on a home, your real estate broker will put your earnest money into an escrow account.
“It can be as little as $1, but normally it’s $500, $1,000 or $2,000,” said Johnston.
This will be money the buyer needs to come up with when an offer is accepted.
Earnest money is usually applied to the buyer’s down payment or closing costs. If your offer is not accepted, the buyer’s money will be returned to you. But, if the buyer backs out of the deal, earnest money might be lost.
DOWN PAYMENT
The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20 percent of the purchase price. For others it might be less.
“Normally, you can get by with 5 percent down, depending on price range,” Johnston said.
Buyers might be able to obtain their down payment through means other than their own checking or savings account.
Johnston said options could include an employer-sponsored program, or seller concessions (when the seller pays part of the closing costs or down payments). Buyers can also use a relative’s or friend’s “gift” for the down payment.
Ask your real estate agent or mortgage specialist for details.
HOME INSPECTION
If you are considering buying anything other than a newly constructed home, it’s a good idea to get a home inspection.
A home inspection is a visual examination of the physical structure and systems of a home, from the roof to the foundation.
“If I was going to spend thousands of dollars on a home, I’d certainly spend a couple more to make sure of the home’s condition. It will not only show you what you need to be concerned about, it will also give you peace of mind,” Johnston said.
Another way to achieve peace of mind is to purchase a home warranty program for your newly acquired property. Again, not necessary on a newly constructed home, but if you are buying an older home with used appliances, it may be well worth your while.
A home warranty is a service contract, which helps protect homeowners against the cost of unexpected covered repairs or replacement on their major systems and appliances that break down due to normal wear and tear.
“When you buy a home, the last thing you want to do is come up with another $1,500 for a new furnace,” said Johnston.
However, the warranty programs will not cover pre-existing conditions.
CLOSING
When you close on your home, you will sit with a closing agent and most likely your real estate agent. You will sign a stack of papers, you will need to provide proof of homeowner’s insurance, identification, usually a certified or cashier’s check for the down payment or closing costs (closing costs usually include an appraisal, survey, loan origination fees, title work and recording fees).
When you apply for your loan, your lender should give you an estimate of the closing costs, so there won’t be any surprises when you sign on the dotted line. From : Putting your money in your own nest egg:
Call Dick Watts Insurance 502-245-3625 for a free Homeowners Insurance Quote
Buying your first Home
Buying your first home in Kentucky,
Here is a great outline of the steps involved in buying your first home:
Here is a great outline of the steps involved in buying your first home:
"It’s a big decision to make, the jump from renter to homeowner. Being able to own a home comes with many rewards — equity buildup, tax advantages and, of course, having something you can call your very own.
When you’re considering buying, it’s a good idea to pick a real estate agent to help.
“We will offer some insight on how the real estate process works,” said Scott Johnston, president of the Aberdeen, S.D., Board of Realtors.
It’s important to let your real estate agent know exactly what you’re looking for in a property -- whether it’s a two-car garage, a finished basement, an updated kitchen or a big back yard. An agent can also help you make informed decisions about the neighborhood you are considering, the quality of the schools, taxes, traffic volume and more.
Another advantage to obtaining a real estate agent’s service is that he or she has immediate access to homes as soon as they are put on the market.
GET PRE-APPROVED
Before you start looking, get pre-approved by a lender you trust. Getting pre-approved by your lender’s mortgage specialist will help you zero in on a price range. Also, if there are any credit blemishes, they can be addressed at the early stages of the process.
There are several types of mortgages available.
A popular example is a fixed-rate mortgage. In a fixed-rate mortgage, your interest rate stays the same for the term of the mortgage. There are no surprises with a fixed-rate mortgage - a borrower always knows exactly how much his or her mortgage payment will be.
With an adjustable rate mortgage, your rate and payment can change either up or down, as often as once or twice a year. The advantage is that you may be able to afford a more expensive home because your initial interest rate will start out lower.
MONTHLY PAYMENTS
Buyers must also be aware that their payment will not only reflect the principal and interest that was borrowed, but will also include an escrow payment for real state tax, homeowners insurance and PMI. (PMI is a financial guaranty that protects lenders against loss in the event that a borrower defaults. A premium is paid by the borrower and is included in the mortgage payment.)
Depending on the location of your home, you might have to include flood insurance and association dues.
Remember that during the life of the loan, you’ll pay far more in interest than you will in principal. Because of the way loans are structured, in the first years you’ll be paying mostly interest in your monthly payments.
MAKING AN OFFER
If you make an offer on a home and your offer is rejected, don’t feel defeated — keep negotiating. It’s normal for it to be a back-and-forth process. If an appraisal comes in too low, don’t worry — it just offers up another opportunity to negotiate.
EARNEST MONEY
When you make an offer on a home, your real estate broker will put your earnest money into an escrow account.
“It can be as little as $1, but normally it’s $500, $1,000 or $2,000,” said Johnston.
This will be money the buyer needs to come up with when an offer is accepted.
Earnest money is usually applied to the buyer’s down payment or closing costs. If your offer is not accepted, the buyer’s money will be returned to you. But, if the buyer backs out of the deal, earnest money might be lost.
DOWN PAYMENT
The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20 percent of the purchase price. For others it might be less.
“Normally, you can get by with 5 percent down, depending on price range,” Johnston said.
Buyers might be able to obtain their down payment through means other than their own checking or savings account.
Johnston said options could include an employer-sponsored program, or seller concessions (when the seller pays part of the closing costs or down payments). Buyers can also use a relative’s or friend’s “gift” for the down payment.
Ask your real estate agent or mortgage specialist for details.
HOME INSPECTION
If you are considering buying anything other than a newly constructed home, it’s a good idea to get a home inspection.
A home inspection is a visual examination of the physical structure and systems of a home, from the roof to the foundation.
“If I was going to spend thousands of dollars on a home, I’d certainly spend a couple more to make sure of the home’s condition. It will not only show you what you need to be concerned about, it will also give you peace of mind,” Johnston said.
Another way to achieve peace of mind is to purchase a home warranty program for your newly acquired property. Again, not necessary on a newly constructed home, but if you are buying an older home with used appliances, it may be well worth your while.
A home warranty is a service contract, which helps protect homeowners against the cost of unexpected covered repairs or replacement on their major systems and appliances that break down due to normal wear and tear.
“When you buy a home, the last thing you want to do is come up with another $1,500 for a new furnace,” said Johnston.
However, the warranty programs will not cover pre-existing conditions.
CLOSING
When you close on your home, you will sit with a closing agent and most likely your real estate agent. You will sign a stack of papers, you will need to provide proof of homeowner’s insurance, identification, usually a certified or cashier’s check for the down payment or closing costs (closing costs usually include an appraisal, survey, loan origination fees, title work and recording fees).
When you apply for your loan, your lender should give you an estimate of the closing costs, so there won’t be any surprises when you sign on the dotted line. From : Putting your money in your own nest egg:
Call Dick Watts Insurance 502-245-3625 for a free Homeowners Insurance Quote
insurance, dog bite claims cost insurers millions
Homeowners Insurance-Have you been cancelled for dog bite claims?
Insurance companies are now excluding certain types of dogs because of the cost of dog bite claims to the insurance industry. We are now representing companies that are willing to provide homeowners insurance even if you own a pit bull or rottweiller or other breeds. The insurance companies we work with may ask you to sign and "Animal Exclusion" form which states that dog bite claims and subsequent liability will be excluded from the policy.
Disclaimer: Every policy is different consult your own policy for coverage agreements. We are not making any coverage decisions or offers of coverage in this article.
Consider this recent reporty from the homeowners insurance industry:
Call Dick Watts Insurance 502-245-3625 for a free homeowners insurance quote.
Insurance companies are now excluding certain types of dogs because of the cost of dog bite claims to the insurance industry. We are now representing companies that are willing to provide homeowners insurance even if you own a pit bull or rottweiller or other breeds. The insurance companies we work with may ask you to sign and "Animal Exclusion" form which states that dog bite claims and subsequent liability will be excluded from the policy.
Disclaimer: Every policy is different consult your own policy for coverage agreements. We are not making any coverage decisions or offers of coverage in this article.
Consider this recent reporty from the homeowners insurance industry:
According to the institute, in 2003 dog bites accounted for about one quarter of all homeowner's insurance liability claims, costing roughly $321.6 million.From: Dog could cost you your insurance
In 2002, liability claims accounted for 6 percent of homeowners' claim costs, costing $345.5 million. The average dog bite claim in 2002, the latest data available, cost insurers $16,600.
"For these reasons, insurance companies will look at the breed of dog when deciding in terms of underwriting," Salvatore said. "There is no industry-wide policy. Each company is going to treat dogs differently."
Examples of breeds typically considered high-risk are American bulldogs, American Staffordshire terriers (also sometimes known as pit bulls), chows, Doberman pinschers and German shepherds.
Call Dick Watts Insurance 502-245-3625 for a free homeowners insurance quote.
insurance, dog bite claims cost insurers millions
Homeowners Insurance-Have you been cancelled for dog bite claims?
Insurance companies are now excluding certain types of dogs because of the cost of dog bite claims to the insurance industry. We are now representing companies that are willing to provide homeowners insurance even if you own a pit bull or rottweiller or other breeds. The insurance companies we work with may ask you to sign and "Animal Exclusion" form which states that dog bite claims and subsequent liability will be excluded from the policy.
Disclaimer: Every policy is different consult your own policy for coverage agreements. We are not making any coverage decisions or offers of coverage in this article.
Consider this recent reporty from the homeowners insurance industry:
Call Dick Watts Insurance 502-245-3625 for a free homeowners insurance quote.
Insurance companies are now excluding certain types of dogs because of the cost of dog bite claims to the insurance industry. We are now representing companies that are willing to provide homeowners insurance even if you own a pit bull or rottweiller or other breeds. The insurance companies we work with may ask you to sign and "Animal Exclusion" form which states that dog bite claims and subsequent liability will be excluded from the policy.
Disclaimer: Every policy is different consult your own policy for coverage agreements. We are not making any coverage decisions or offers of coverage in this article.
Consider this recent reporty from the homeowners insurance industry:
According to the institute, in 2003 dog bites accounted for about one quarter of all homeowner's insurance liability claims, costing roughly $321.6 million.From: Dog could cost you your insurance
In 2002, liability claims accounted for 6 percent of homeowners' claim costs, costing $345.5 million. The average dog bite claim in 2002, the latest data available, cost insurers $16,600.
"For these reasons, insurance companies will look at the breed of dog when deciding in terms of underwriting," Salvatore said. "There is no industry-wide policy. Each company is going to treat dogs differently."
Examples of breeds typically considered high-risk are American bulldogs, American Staffordshire terriers (also sometimes known as pit bulls), chows, Doberman pinschers and German shepherds.
Call Dick Watts Insurance 502-245-3625 for a free homeowners insurance quote.
How to find an affordable home mortgage
Homes in Kentucky, How to find an affordable home mortgage in Kentucky
There are some good tips about home mortgages in this article
How to Cross the Mortgage Minefield
article from Kentucky.com
Decided to buy a house? Now the challenge becomes finding an affordable mortgage.
What's best for you? Conventional? No money down? Adjusted-rate mortgage? Interest only?
In this aggressive mortgage market, the question can be overwhelming. And the dozens of offers likely to clutter your e-mail inbox on a weekly basis probably only add to the confusion.
"The first thing is to understand what you need and what you want -- explore the various options for mortgages with multiple lenders before you go and fall in love with a house," said Doug Duncan, senior vice president and chief economist for the Mortgage Bankers Association.
"You should have looked at your credit report to know it's accurate, you should know what you owe and who you owe it to, and you should know the status of your monthly free cash and savings before you go to the lender.
"The key, then, is to talk to multiple lenders because they serve different parts of the market," Duncan said. "Shopping will always help you ensure that you are getting consistent stories. Then you can negotiate. When I've bought homes, I've always talked to at least three lenders and I've always gotten a better deal."
In today's market, someone with strong credit should look for a mortgage that requires a down payment as low as 3 percent, doesn't have up-front charges and carries an interest rate no higher than 6.5 percent. However, it's likely that interest rates will continue to rise above this week's national average of 6.35 percent.
In March, the Federal Reserve raised rates for the 15th time since the summer of 2004. The federal funds rate -- what banks charge each other for overnight loans -- moved up a quarter point to 4.75 percent.
The federal funds rate is at its highest level in five years, and some economists estimate it will continue a slow uptick that could reach 5.5 percent by the end of the year.
The federal funds rate helps dictate consumer loan rates for mortgages, home equity lines of credit and credit card bills.
When shopping for a mortgage, it's important to take advantage of the Truth-in-Lending Act disclosures; they allow consumers to shop around to compare various lenders' combinations of rates and fees.
Under the law, borrowers are able to weigh competing lenders' full packages of terms in writing before they choose -- factors such as the base interest rate on the loan, the disclosed finance charges and the annual percentage rate.
It's important to know about the many options available to people purchasing a home.
Consider the choices, both traditional and exotic:
• 30-year fixed rate: The monthly payment and interest rate are the same for 30 years.
• 15-year fixed rate: The monthly payment and interest rate are the same for 15 years.
• 5-year balloon mortgage: The monthly payment and interest rate are the same for five years. At the end of the fifth year, the loan is due in full. The borrowers must refinance into a new loan program if they are staying in the home, or pay the loan balance in full.
• Adjustable-rate mortgages: The ARM payment moves up and down as interest rates rise and fall. Lenders give borrowers low rates at the beginning, but the homeowners bear the risk that if rates rise, their payments will climb.
• 2/28 or 3/27 ARMs: A 30-year mortgage in which borrowers start with a low fixed interest rate for two or three years, then the rate adjusts annually for the next 27 or 28 years.
• 3/1-year adjustable rate: The monthly payment and interest rate are the same for three years. Beginning in the fourth year, the monthly payment and interest rate might change every year for the rest of the loan period.
• Interest only: Borrowers pay interest but no principal in the beginning years of the loan; that keeps monthly mortgage payments low.
• Miss-a-payment: Borrowers are allowed to skip up to two mortgage payments a year and up to 10 payments over the life of the loan without affecting their credit rating.
• Piggyback: The loan combines a traditional first mortgage and a home-equity loan or line of credit to avoid private mortgage insurance.
• Payment option: Borrowers have four payment options each month.
There are some good tips about home mortgages in this article
How to find an affordable home mortgage
Homes in Kentucky, How to find an affordable home mortgage in Kentucky
There are some good tips about home mortgages in this article
How to Cross the Mortgage Minefield
article from Kentucky.com
Decided to buy a house? Now the challenge becomes finding an affordable mortgage.
What's best for you? Conventional? No money down? Adjusted-rate mortgage? Interest only?
In this aggressive mortgage market, the question can be overwhelming. And the dozens of offers likely to clutter your e-mail inbox on a weekly basis probably only add to the confusion.
"The first thing is to understand what you need and what you want -- explore the various options for mortgages with multiple lenders before you go and fall in love with a house," said Doug Duncan, senior vice president and chief economist for the Mortgage Bankers Association.
"You should have looked at your credit report to know it's accurate, you should know what you owe and who you owe it to, and you should know the status of your monthly free cash and savings before you go to the lender.
"The key, then, is to talk to multiple lenders because they serve different parts of the market," Duncan said. "Shopping will always help you ensure that you are getting consistent stories. Then you can negotiate. When I've bought homes, I've always talked to at least three lenders and I've always gotten a better deal."
In today's market, someone with strong credit should look for a mortgage that requires a down payment as low as 3 percent, doesn't have up-front charges and carries an interest rate no higher than 6.5 percent. However, it's likely that interest rates will continue to rise above this week's national average of 6.35 percent.
In March, the Federal Reserve raised rates for the 15th time since the summer of 2004. The federal funds rate -- what banks charge each other for overnight loans -- moved up a quarter point to 4.75 percent.
The federal funds rate is at its highest level in five years, and some economists estimate it will continue a slow uptick that could reach 5.5 percent by the end of the year.
The federal funds rate helps dictate consumer loan rates for mortgages, home equity lines of credit and credit card bills.
When shopping for a mortgage, it's important to take advantage of the Truth-in-Lending Act disclosures; they allow consumers to shop around to compare various lenders' combinations of rates and fees.
Under the law, borrowers are able to weigh competing lenders' full packages of terms in writing before they choose -- factors such as the base interest rate on the loan, the disclosed finance charges and the annual percentage rate.
It's important to know about the many options available to people purchasing a home.
Consider the choices, both traditional and exotic:
• 30-year fixed rate: The monthly payment and interest rate are the same for 30 years.
• 15-year fixed rate: The monthly payment and interest rate are the same for 15 years.
• 5-year balloon mortgage: The monthly payment and interest rate are the same for five years. At the end of the fifth year, the loan is due in full. The borrowers must refinance into a new loan program if they are staying in the home, or pay the loan balance in full.
• Adjustable-rate mortgages: The ARM payment moves up and down as interest rates rise and fall. Lenders give borrowers low rates at the beginning, but the homeowners bear the risk that if rates rise, their payments will climb.
• 2/28 or 3/27 ARMs: A 30-year mortgage in which borrowers start with a low fixed interest rate for two or three years, then the rate adjusts annually for the next 27 or 28 years.
• 3/1-year adjustable rate: The monthly payment and interest rate are the same for three years. Beginning in the fourth year, the monthly payment and interest rate might change every year for the rest of the loan period.
• Interest only: Borrowers pay interest but no principal in the beginning years of the loan; that keeps monthly mortgage payments low.
• Miss-a-payment: Borrowers are allowed to skip up to two mortgage payments a year and up to 10 payments over the life of the loan without affecting their credit rating.
• Piggyback: The loan combines a traditional first mortgage and a home-equity loan or line of credit to avoid private mortgage insurance.
• Payment option: Borrowers have four payment options each month.
There are some good tips about home mortgages in this article
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