Prepare The Same For Every Hurricane Season

Early 2017 Atlantic hurricane forecasts are predicting fewer storms, but here’s why coastal residents shouldn’t let their guard down.

Colorado State University’s (CSU) Tropical Meteorology Project: “Coastal residents are reminded that it only takes one hurricane making landfall to make it an active season for them, and they need to prepare the same for every season, regardless of how much activity is predicted.”

London’s TSR (Tropical Storm Risk): The precision of hurricane outlooks issued in April is low and large uncertainties remain for the 2017 hurricane season.

Forecasters believe development of potential El Niño conditions in the coming months will suppress storm activity.

What are the numbers?

CSU: 11 named storms, with 4 hurricanes and 2 major (Category 3-4-5) hurricanes. The median between 1981 and 2000 was 12 named storms, 6.5 hurricanes and two major hurricanes. U.S. major hurricane landfall is estimated at 80 percent of the long-period average.

TSR: 11 named storms, with 4 hurricanes and 2 major hurricanes. 2017 Atlantic hurricane activity will be 30 percent below 1950-2016 long-term average.

I.I.I. hurricane facts and statistics here, plus information on flood insurance here.

Following Insuring Florida blog for more on hurricane preparedness.

The Cost Of A Dog Bite

When dogs bite homeowners insurers pay out an average of $33,230 per claim.

In fact, dog bites and other dog-related injuries accounted for more than one-third of all homeowners liability claim dollars paid out in 2016, costing in excess of $600 million, according to the Insurance Information Institute and State Farm.

The average cost per claim paid out by insurers actually decreased by more than 10 percent in 2016, but the average cost per claim nationally has risen more than 70 percent from 2003 to 2016 (see chart).

This is due to increased medical costs as well as the size of settlements, judgments and jury awards given to plaintiffs, the I.I.I. reports.

Costs vary widely by state.

The state with the highest average cost per claim was New York, at a whopping $55,671 per claim.

For more state-specific information, go to the I.I.I.’s interactive map.

National Dog Bite Prevention Week® (April 9-15, 2017), is an annual event designed to provide consumers with information on how to be responsible pet owners while increasing awareness of a serious public health issue.

Watch this I.I.I. video for tips on preventing dog bites:

An Elementary Mistake

I.I.I. chief actuary James Lynch explains why ProPublica’s analysis on auto insurance is inaccurate, unfair and irresponsible:

It looks like ProPublica failed its first actuarial exam.

The renowned investigative journalism website has, along with Consumer Reports magazine, published reports that auto insurers systematically charge unfairly high rates to people in minority and low-income communities.

It is an explosive charge—to say that in, for example, Illinois, 33 out of 34 companies the journalists looked at (including the nation’s largest insurers) all systematically price-gouged minority communities and areas with predominantly low income households.

And the charge is inaccurate.

Read Lynch’s full Op-Ed in Insurance Journal here.

Guaranty Funds: A Safety Net For Policyholders

News headlines about the failure of long-term care insurer Penn Treaty American Corp. of Allentown, Pennsylvania, underscore that while failures of U.S. insurers are rare, they are possible.

The New York Times reports that the order from state authorities calling for the liquidation of the medium-sized insurer and the closure of its operations leaves tens of thousands of Penn Treaty policyholders in limbo.

The good news is that a safety net exists to protect policyholders.

For decades, life/health (including long-term care) and annuity policyholders, as well as property/casualty insurance customers have been protected against the insolvency of an insurance company through what is known as a guaranty fund system.

So in this case, state life and health insurance guaranty funds will continue to service the policies of Penn Treaty policyholders, ensuring that they continue to receive coverage, despite the insurer’s failure.

To be eligible for guaranty fund coverage protection, it is important that policyholders continue to pay their policy premiums in full and on time.

Maximum levels and types of policies covered by state guaranty funds vary from state to state. Here is a list of the maximum amount each state’s guaranty fund will pay.

More information on the Penn Treaty Network America Insurance Company liquidation via the National Organization of Life & Health Insurance Guaranty Associations.

And here is additional background information on insolvencies and state guaranty funds, via the I.I.I.

A Recovered Rockwell And The Art Of Coverage

Artwork and other valuable items like antiques and jewelry are often targets of theft which is why it’s important to have them properly appraised and insured.

Take this story of the Norman Rockwell painting “Boy Asleep with Hoe” (pictured below) which has been returned to the family of its original owners in Philadelphia more than 40 years after its theft.

In today’s I.I.I. Daily: the painting was taken in 1976 from a family home in Cherry Hill, New Jersey. The family then filed a claim to their insurer, Chubb. Chubb insured the painting, paid the claim and acquired the painting’s title.

As Antiques and the Arts reports, the 40-year art mystery was solved when a lawyer contacted the FBI’s art crimes division in October that a client had a painting that didn’t belong to him that he wished to return.

The estimated value of the recovered painting is put at between $600,000 and $1 million, significantly more than its value at the time of theft.

The family returned the 1970s claims payment to Chubb in exchange for the painting. Chubb will donate the funds to Norman Rockwell Museum in Stockbridge, Massachusetts.

I.I.I. tip: A standard homeowners policy offers only limited coverage for high value items. If you have belongings that exceed these limits, you should consider supplementing your policy with a floater, a separate policy that provides additional insurance. Before purchasing a floater, the items covered must be professionally appraised. Don’t forget to add these belongings to your home inventory.

Insurance And Your Tax Return

Answers to your tax questions in this guest post by Brian O’Connor, a freelance personal finance writer:

Can you ever deduct your homeowners or auto insurance premiums? And could you end up owing tax on an insurance payout?

The general answer is “No,” but like anything that involves taxes, the real answer is “It depends.”

“As a general rule, personal expenses are not deductible under the tax code,” says Mark Luscombe, principal federal tax analyst for Wolters Kluwer Tax & Accounting practice. “If you use part of the home as a home office or rent out part and get rental income, then you can allocate a portion of the insurance cost to that business activity and it’s deductible against your business income.”

The same goes with your auto insurance payments. If you use your car for business or in a side gig, you can deduct some of that cost. The easy way on auto is to just claim the IRS mileage allotment of 54 cents per mile (you can do that with miles driven for charity work, too). That number covers gas, maintenance, insurance and other car expenses.

On your home, you can take $5 per square foot for your home office. That amount is likewise calculated to cover all your costs of home ownership, including insurance.

Or you go the complicated route, add up all your real expenses and then deduct them to the extent that your home or car was used for business. If it was 20 percent of the time, you can write off 20 percent of those costs.

In terms of an insurance payment, it typically won’t be taxable, unless you make a huge profit beyond what you paid for the property that was damaged, stolen or destroyed.  And if an insurance payment fails to cover your total loss? It’s a stretch but you take a big enough hit, you might have a deduction.

“You really have to be talking about a pretty big loss before you can write anything off,” explains Barbara Weltman, contributing editor of J.K. Lasser’s Your Income Tax 2017.

More information on tax filing and insurance from the I.I.I. website.