As we put the finishing touches on our costumes, here is a short roundup of interesting and spooky Halloween-related news from around the web.
Inc. magazine published some good tips for business owners on how to prevent getting burned by liability claims stemming from Halloween-related events at work.
I.I.I.’s own Michael Barry provided CNBC with advice for consumers on how to review their insurance policies for potential gaps to help avoid any financial shock from holiday mischief and mishaps.
Franz Kafka’s career in insurance is illuminated in this Contingencies article. The writer, famous for his surreal and arguably scary worldview, worked as an insurance agent at the Workers’ Accident Insurances Institute of the Kingdom of Bohemia in Prague from 1908 to 1917. He is described as a successful and valued employee who cared deeply about his work.
And speaking of writers, Edgar Allen Poe’s poem “The Bells” was once used in an ad for fire insurance.
The I.I.I. has tips for safeguarding your home against Halloween mishaps.
Now let’s talk a little bit about homeowners insurance and marijuana.
Except for Manitoba and Quebec, all Canadian provinces will let people grow a small amount of marijuana at home – usually up to four plants.
Unfortunately for the aspiring bud-growers out there, growing pot isn’t as easy as growing basil. Marijuana is a fickle weed and needs a lot of care to grow into a viable plant. It can be grown outside or on the window-sill, but a healthy and vibrant marijuana especially likes a hot, light-intensive, steamy environment – not exactly an accurate description of Canada’s climate.
Which is why a whole industry has grown up around providing home-growers with hydroponic, lighting, and climate control systems to grow pot indoors, safely tucked away from the blinding snows and sub-zero temperatures of a Canadian winter.
How will home-grown marijuana affect homeowners insurance?
Higher risks. Well, for one, these grow systems are definitely not risk-free. High-intensity heat lamps can mean a strung-out electrical system, which can lead to fires. Humid temperature controls mean lots of moisture, which can damage your house with mold and fungi growths.
Higher premiums. Higher risks mean that an insurance company will probably ask for more premium to make up the difference. A spokesperson for the Insurance Bureau of Canada has been quoted as saying that insurers asking about home-grown pot may become routine: “[insurers] just want an accurate idea of what you’re doing and any risk factors that should go into determining your premium […] they’re going to underwrite your policy based on a number of factors. It’s just another factor that gets consideration when setting an insurance premium.”
Coverage questions. It’s also important to know what your insurance does and does not cover. For example, some damage caused by mold or fungi is often excluded by a standard homeowners policy. And most policies limit the amount of money an insurer will pay for damaged plants. This limit might not always be high enough to reimburse for marijuana plants, which can be pretty valuable.
So if you’re a Canadian planning to use a marijuana grow system at home, talk to your insurer – especially if you’ll be installing complicated equipment.
But if you’re not careful, what happens after the storm can be just as harmful as the hurricane itself.
Beware the shady contractor. It’s a terrible story: someone’s home is damaged from a hurricane. A contractor shows up at their property and offers to complete immediate emergency repairs. All the homeowner needs to do is sign some paperwork and, the contractor assures them, their insurance company will pay for the repairs – easy as that!
Wrong. Shady contractors are not your friend. If you live in Florida, then the paperwork they want you to sign is often an “assignment of benefits” (AOB), a document that gives the contractor the right to receive payouts from your insurance company directly for repairs. (You can read all about how it works – or doesn’t work, as the case may be – on the Florida state website.)
Fraud is real and rampant. In the worst-case scenario, the shady contractor makes minimal or no repairs to the person’s home at all, but they’ll file a large claim with the insurance company anyway. If the fraudster is lucky, they’ll get the insurance payout and skip town. Meanwhile, the house is still ruined, and the homeowner didn’t get help to fix it.
Your home could go unrepaired for weeks, even months. Or the shady contractor will do unnecessary repair work, like ripping apart the kitchen because of “potential mold damage.” He promises to re-install the kitchen – but in the meantime, he bills the insurance company and the insurer pays. Sometimes, the contractor won’t reinstall the kitchen, often on some pretext or other.
This has especially been a huge problem in Florida. You can read some AOB abuse horror stories on the Consumer Protection Coalition website.
There are a lot of scams out there. Not all shady contractors are using AOBs. The Florida Department of Financial Services has also issued warnings about fraudsters who offer to provide repairs for cash – and then never provide repairs.
Talk to your agent before signing anything. Never, ever sign anything before you talk to your insurance company. Especially not if a contractor is putting up red flags, like pressuring you into signing an AOB or demanding large repair deposits up front. Contrary to what the contractor might say, you do not need to sign an AOB to get your home repaired or your insurance claim processed.
Instead, call your insurer. Many insurers will dispatch approved companies to complete emergency repairs on your property. And you’ll still be in control of your insurance policy, which hopefully will make you whole again. No shady contractors needed.
Approximately 758,657 homes in North Carolina, South Carolina and Virginia with a reconstruction cost value (RCV) of approximately $170.2 billion are at potential risk of storm surge damage from Hurricane Florence, according to a Corelogic® release.
As we continue to keep a close watch on Hurricane Florence, we’ve put together a list of our content to help understand the insurance implications of storm related property losses.
Move over, ridesharing, there’s a new urban mobility player in town: dockless electric scooter (e-scooter) sharing programs are growing in popularity in cities across the U.S. They operate like bike-sharing programs, but they introduce some interesting insurance issues.
The concept is pretty simple: you download an app from companies like Lime and Bird that lets you find and unlock an e-scooter nearby for a small fee, often just $1. You can then, well, scoot off wherever you want to go, paying per mile of riding. These rented devices are “dockless,” so once the trip is completed, you can park your e-scooter anywhere that local ordinances permit – they can’t block public paths, for example.
We’re not talking about mopeds or Vespa-like scooters, which allow drivers to sit, can reach relatively high speeds, and often require a driver’s license. These are battery-powered Razor-like scooters, which require a you to stand, often can’t go faster than 15 or 20 mph, and usually don’t require a driver’s license.
You can cause a lot of damage at 15 mph, though – trust me, I’ve seen a person step in front of a fast-moving road bike. It wasn’t pretty.
So if you cause an accident, are you covered? That’s where things get a bit murky.
First off, in most cities, the company renting you the scooter probably won’t cover your liability – that’s part of the multipage user agreement you endorse by clicking the ‘I Agree’ button. You’re basically riding at your own risk. This may change, though, as scooting sharing spreads. San Francisco’s new permitting process, for example, requires these companies to have “adequate insurance” for each of their users.
As for your own insurance, whether you’re covered depends on the specific terms and conditions of your policies. You should speak to your insurer or agent. When they were created, the typical homeowners and personal auto policies didn’t really consider whether they’d cover a motorized scooter you just picked up off the curb. Expert opinion and wording are critical.
Homeowners: Under a standard homeowners policy (for example, the HO-3), motor vehicles are usually understood to be any self-propelled vehicle and aren’t covered. That is what an auto policy is designed to do. It’s pretty much the same for renters insurance.
Personal Auto: The standard personal auto policy excludes liability coverage for a vehicle with fewer than four wheels. The scooters we’re talking about have two wheels.
Personal Liability Umbrella: Personal liability umbrella policies (PLUP) offer an extra layer of protection that kicks in when you reach the limit of your underlying homeowners or auto policy. They can also give coverage for things that are excluded from your other insurance policies. For example, unlike an auto policy, a standard PLUP does not usually exclude vehicles with fewer than four wheels.
The bottom line is: check with your insurer or agent about your coverages.
Hailstorms have grown more destructive in recent years, causing up to $10 billion per year in damage. The reasons range from larger homes being built, to more homes being built in vulnerable places, to the rising costs of roofing materials, according to a recent Washington Postarticle.
The first North American Workshop on Hail and Hailstorms is happening this week (August 14- 16) in Boulder, Colorado. The group will discuss the rising costs of hail damage, and 200 experts from the fields of meteorology, engineering, economics and insurance are attending. These experts will work together to better detect hail; the microphysics and dynamics of hailstorms; the cost of damage and how to mitigate it; and the likely effects of a changing climate on hailstorms.
The I.I.I. has facts and statistics on hail damage here.
By Steven Weisbart, Chief Economist, Insurance Information Institute
For a dozen years – from 2004 through 2016 – the number of owner-occupied homes in the U.S. was virtually unchanged at about 75 million, even though the population grew by more than 30 million during that time span. In the same period, the number of renter-occupied residences spiked – from about 33 million to about 43 million. Both trends persisted through the Great Recession, and on into the recovery, during which time mortgage interest rates plummeted, and many homes went on the market at bargain rates, thanks to foreclosure or short sales.
The implications of these trends for the homeowners and renters insurance exposure bases are easy to see: very little exposure growth in the homeowners market – except for renovation of existing homes and total replacement of older homes with newer ones – and substantial exposure growth (about 30 percent) in the renters market. Premium growth in these lines were affected, since the vast majority of owner-occupied homes are insured, but only 40 percent of renters buy renters insurance.
Based on data released by the Census Bureau on July 26, 2018, we feel confident in saying that these trends have reversed. The number of owner occupied homes as of the second quarter of 2018 is nearly 78 million, and it has increased in every quarter except the third quarter of 2016. The number of renter-occupied homes was 43.9 million in the third quarter of 2016, but dropped to about 43 million by the second quarter of 2018.
As a result – even ignoring the increasing cost of rebuilding damaged homes and content – if the trend holds, homeowners insurers should expect to see a growing exposure base in this line.
On May 9 California became the first state to mandate that all new homes have solar power. The rules go into effect in two years, and are part of the state’s efforts to cut greenhouse gas emissions.
Under the new rules, individual homes must have rooftop solar panels, or a shared solar-power system serving a group of homes. Rooftop panels can either be owned outright and rolled into the home price, or made available for lease. The requirement is expected to add $8,000 to $12,000 to the cost of a home, according to the New York Times. However, savings from heating and cooling could add up to $80 per month.
To help homeowners understand whether solar panels are covered by homeowners insurance, we’ve put together this Q&A.
Q: Are my solar panels covered by homeowners insurance?
A. Yes. Most solar panels are considered a permanent attachment (like a deck) and are therefore protected by a homeowners policy. You will want to call your insurance company and make sure your panels are covered.
Q: How much coverage do I have? A. Your insurance policy’s coverage limit is the maximum amount that it will pay toward a covered loss. Since solar panels can be expensive, make sure your coverage limit is adequate.
Q. Will having solar panels increase my homeowners insurance premiums?
A: Most likely, yes. Some carriers allow owners with solar energy systems to purchase an optional endorsement to cover the panels. Others include the coverage in the dwelling coverage (Coverage A), if the panels are on the roof of the home, or under “Coverage B,” if they are on the ground or on the roof of a detached structure. Either way, there are replacement costs associated with the panels that would likely increase homeowners premiums. Homeowners can expect to benefit from solar with increased energy efficiency in the home, but time will tell if the economic advantage of having solar panels outweighs the incremental, upfront costs.
Just like residential sprinkler systems increase water-damage claims, it’s reasonable to expect that solar panels, when attached to roofs, might also increase the chances of roof claims because of damage caused by a windblown panel or a leak at the point of contact, as examples.
Q. What are some of the risks of having solar panels?
A: If a home catches fire, solar panels can be challenging for firefighters. The PV arrays increase the risk of electrocutions, slips and falls and other serious injuries. If the fire is on the roof, the concealed spaces between the panels make it very difficult to get them extinguished. Solar panels are always live, and contact with them with them can cause shock or electrocution. Fire departments are implementing programs to learn how to handle solar panels.
By Michael Barry, Head of Media and Public Affairs, Insurance Information Institute
The number of structures destroyed by the eruption of the Kilauea volcano on Hawaii’s Big Island has climbed up to 35 today since the eruption first started on Thursday, May 3, sending sulfur dioxide into the air, and prompting the evacuation of at least 1,700 residents.
The issues impacting Hawaii’s Big Island:
The percentage of impacted property owners carrying either homeowners, business, or earthquake insurance is unknown at this time.
Lava Zones 1 and 2—deemed the most dangerous of the nine Lava Zones on the Big Island—are where the current crisis is occurring.
The U.S. Geological Survey (USGS) makes the Lava Zone designations and the federal governmental agency’s Zone ratings are considered when insurers assess their risks on Hawaii’s Big Island.
The Big Island was also the site of a 6.9-magnitude earthquake on Friday, May 4, the strongest quake to hit Hawaii in 40-plus years. The earthquake was one of hundreds to be felt recently on the Big Island even though none of them caused any notable threat either to life or property.
The insurance coverages which will come into play:
Lava-caused property damage is usually attributed to fire; fire-caused losses are covered under standard homeowners (h/o) and business insurance property policies.
Earthquake-caused property damage, or losses tied either to earth movement or land tremors, is covered only if the homeowner or business owner purchased an earthquake insurance policy in addition to a standard h/o or business insurance policy.
Few property owners in this part of the Big Island have earthquake insurance coverage.
Homeowners forced to evacuate their residences might have coverage through their h/o policy for additional living expenses (ALE) but ALE usually only kicks in when a home has been directly impacted by lava flow.
Lava and earthquake-caused (fire, falling objects) property damage to vehicles is generally covered under standard auto insurance policies so as long as the vehicle owner purchased optional comprehensive coverage.
The top 10 writers of homeowners insurance in Hawaii appear below. (more here)
The Hawaii Property Insurance Association, the state’s not-for-profit property insurer of last resort, has since the 1990s sold property insurance to homeowners unable to purchase coverage due to the threat of an volcanic eruption in Lava Zones 1 and 2 on Hawaii’s Big Island.
The state government’s response to the crisis:
Governor David Ige (pronounced E-GAY) visited the Big Island on Friday, May 4, and met w/elected officials, first responders, and impacted residents.
The governor activated Hawaii’s National Guard to assist Hawaii County with monitoring sulfur dioxide gas emissions, facilitating evacuations, and providing neighborhood security.
Over two dozen homes have been destroyed so far when the Kilauea volcano on the island of Hawaii began erupting last week. Lava flowed into residential neighborhoods on the eastern side, as this Wall Street Journal video shows, and the island has been shaken by hundreds of earthquakes, the largest one with a magnitude of 6.9 occurred on Friday.
The I.I.I. has a primer on volcanic eruption insurance coverage. Below are some highlights:
Most home, renters and business insurance policies provide coverage for property loss caused by volcanic eruption when it is the result of a volcanic blast, airborne shockwaves, ash, dust or lava flow. Fire or explosion resulting from volcanic eruption also is covered.
Homeowners and business owners’ policies also provide coverage for property damage, vandalism or theft due to looting if the occupants are displaced.
There is typically a 72-hour waiting period before business interruption coverage kicks in.
Damage to vehicles caused by lava flow is covered under your auto insurance policy if you have comprehensive coverage, which is optional. Direct, sudden damage to engines from volcanic ash or dust is also covered under most policies.
What isn’t covered
Most home, renters and business insurance policies do not cover damage from earthquake, land tremors, landslide, mudflow or other earth movement regardless of whether the quake is caused by or causes a volcanic eruption. Earthquake insurance is available from private insurers as an endorsement to a homeowners policy.
Damage to land, trees, shrubs, lawns, property in the open or open sheds (or the contents of those sheds) is typically not covered.
The cost to remove ash from personal property is generally not covered unless the ash first causes direct physical loss to personal property. There is also no coverage to remove ash from the surrounding land.
Damage that occurs to homes, businesses or vehicles over time due to volcanic dust is not covered under most policies.
Volcanic Effusion (i.e. volcanic water and mud) is not covered under a typical homeowners, renters or business insurance policy. However, it is covered by flood insurance, available through the National Flood Insurance Program.