Tag Archives: insurance claims

My floodiversary

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Today marks one year when my car got flooded, I got stranded, and I learned a huge lesson: I call it my floodiversary.

We keep a small saltwater tank, and to keep the tank healthy, it needs regular water changes. Before the Fourth of July weekend I decided to swing by the local fish store and pick up 5 gallons of water to replenish the tank. That way I could get the chores out of the way in order to relax and enjoy the rest of the holiday weekend.

I got to the store in time and picked up a five-gallon industrial container. I put it in the back, put the hatch down and started the 30-minute trip home. About halfway there, I made a turn. That’s when the trouble started. The car began to lose power. Fortunately I was able to pull over. I tried to start the car. Nothing. A new car…why? Then it occurred to me: the %$@*& water. I went to the back, opened the hatch and sure enough, my trunk had about an inch of water gently sloshing back and forth. I started to try and scoop the water out with the bucket, but it was impossible.

I went back to the car, got in and left the door open and started to assess my options. It was sweltering–about 90 degrees; I was in the middle of nowhere and had spotty cell service. I let my family know where I was and tried to connect to my car’s emergency system. After many tries and fails, and even speaking to an engineer, it was clear the car was not going to start up again. So I waited for the tow truck and my husband, as I swatted mosquitoes and thought about cold drinks and air-conditioning.

The tow truck arrived from the dealership, but the guy was in a hurry. He refused to let me ride back with him, but it was a war of wills. I was determined not to be left on the side of the road, so I stalled by asking him questions until my husband pulled up. We both watched as the car was raised on the flatbed, with water streaming out the back. It was a holiday weekend, so the car would have to sit on the lot in the heat all weekend. My husband had brought a stack of towels, so we did what we could. We looked at each other. No more water in the car.

On the ride back home I called my insurer. They couldn’t do much over the weekend but would be back in touch after the holiday. The next week I got the call. After the deductible was met, the damage was all covered—about $4,500 all in. My insurance also covered the cost of a rental car. The adjuster assured me the car would be fine; it turns out the water had shorted out a panel located in the trunk of the car that connected to its “brain.” But after the ordeal, it was a relief to know the car would be ok and ready to drive after a few days. The adjustor had been pleasant and helpful. “I got to tell you,” he said, “I’ve seen flooding before. But I’ve never seen a car flooded from the inside.”

Lightning-related homeowners insurance claims down, costs up

The number of lightning-caused U.S. homeowners insurance claims has decreased over the past few years, yet the average cost per claim has increased, according to Insurance Information Institute (Triple-I) findings.

“It’s not surprising that lightning-related homeowners insurance claims costs have risen,” said James Lynch, chief actuary and senior vice president of Research and Education at the Triple-I. “Homes are more susceptible to lightning damage because electronic systems have become more interconnected – think Smart Homes – which have an easy gateway to much of a home’s electronic network, damaging scores of devices and appliances at once.”

Triple-I found that:

  • More than $920 million in lightning claims were paid out in 2019, up from $909 million in 2018
  • There were 76,860 lightning claims in 2019 down from 77,898 in 2018
  • The cumulative value of claims caused by lightning rose 1.2 percent between 2018 and 2019 and 0.4 percent from 2017-2019
  • The average cost that insurers paid on lightning-related claims increased by 11 percent between 2017 and 2019, and by 2.6 percent from 2018 to 2019.

Florida – the state with the most thunderstorms— was the top state for lightning claims in 2019, with 6,821, followed by Texas (5,780) and California (5,100).  Of the states with largest number of claims, Texas had the highest average cost per claim at $15,278.

Homeowners Insurance Coverage

Damage caused by lightning, such as a fire, is covered under standard homeowners insurance policies.  Some policies provide coverage for power surges that are the direct result of a lightning strike, which can cause severe damage to appliances, electronics, computers and equipment, phone systems, electrical fixtures and the electrical foundation of a home.

In recognition of Lightning Safety Awareness Week, June 21-27, the Triple-I and the Lightning Protection Institute (LPI), a national organization that promotes lightning protection education, awareness and safety, encourage homeowners to install a lightning protection system in their home. 

“When it comes to lightning, safety and liability are two important factors,” said Tim Harger, executive director of LPI. “The safest place in any lightning event is within a structure protected by a properly designed, inspected and certified lightning protection system. Lightning protection systems protect the electronic infrastructure, core and knock-on functions of properties and can significantly reduce the more than $900 million of insured claims.”

To locate an LPI-certified lightning protection system installer in your area, click here.

U.S. lightning fatalities have also been declining, due partly to increased awareness of lightning danger.

To learn more about lightning safety click here.

Managing your insurance claim after disaster

Lynne McChristian

By Lynne McChristian, I.I.I. Media Spokesperson and Non-resident Scholar 

If Hurricane Dorian left its imprint on your home or business, you’ve likely already started the claims process with a call to your insurer. Knowing what happens next will be helpful as the recovery begins.

The insurance claims process is indeed a process. There are steps involved and requirements from both the policyholder and the insurance company. Most people have never had to file an insurance claim of any sort. And if they had, it might have been an automobile accident claim, which can be far less complex that one that involves damage to something as large and costly as a home and whatever is inside it.

After a widespread natural disaster, insurers take a triage approach to claims handling, and that means those people who suffered the most damaging losses are seen first. Obviously, everyone with damage wants to be seen promptly, yet taking care of people in order of damage is what serves those most in need.

After you report a claim, someone will be sent out to appraise the damage. You might have more than one insurance claims professional visit, as there is separate expertise involved – depending on the damage you reported. You might have someone look at the structure, an additional claims adjuster for the contents damage, and then a flood damage claims expert visit your property, if you have flood insurance protection. Some of these insurance professionals may work directly for your insurer, while others are hired as independent contractors to give your claim faster attention. Tip: Get a business card and cellphone number for every person who appraises the damage, so you can follow up.

If your home is so badly damaged that you cannot live in it, you may get a check on the spot from your claims adjuster. This is not a settlement check. It is coverage that is part of a standard homeowners policy, called Additional Living Expense. It covers the extra expenses you’ll have if you must live elsewhere while your home is repaired or rebuilt.

Above all else, keep organized and retain all your receipts. Temporary repairs you made to prevent further damage are covered under your policy. You will want to keep the process rolling to return to normal – and insurers want that, too.

 

Is relief in sight for personal and commercial auto claims?

By Steven Weisbart, Chief Economist, Insurance Information Institute

 

 

About three years ago the Insurance Information Institute noticed a strong correlation between the number of people employed and the amount of driving done, as measured by the U.S. Department of Transportation’s monthly survey of vehicle-miles traveled. Of course, it is reasonable to expect that as more people hold jobs, most would drive to work. And as those who had been unemployed gained incomes, they would also logically be likely to drive more for leisure.

Further, we noticed another strong correlation between vehicle-miles traveled, on the one hand, and the collision paid claim frequency rate (as captured by Fast Track Monitoring Service), on the other—which is also a logical relationship. This, in addition to other factors, such as an increase in distracted driving, higher speed limits on some roads and other causes, helped explain the unusual spike in the frequency of auto insurance claims in 2015 and again in 2016.

However, lately these relationships appear to be weakening. For example, the year-over-year increase in vehicle-miles traveled was more than 2 percent in 2015 and 2016, and despite continued steady growth in the number of people employed, was 1.5 percent in the first half of 2017, just under 1 percent in the second half of 2017, and under 0.5 percent in the first five months of 2018 (the latest data available).

It’s possible that the rise in the price of gasoline is affecting vehicle-miles traveled. For most of 2016 the retail price of a gallon of gas (all grades) was less than $2.40, but for the first half of 2017 it averaged $2.50 and for the second half of 2017 averaged $2.65. For the first half of 2018 the average was roughly $2.85.

The collision paid claim frequency rate has also flattened, echoing the pattern of vehicle miles traveled. These new patterns suggest that the beleaguered private passenger and commercial auto claims might finally see some relief following a few years of combined ratios well north of 100.

Behavioral economics and the claims management process

How might behavioral economics apply to the claims management process? Maria Sassian, research manager at the I.I.I., investigates:

A recent edition of Gen Re’s Claims Focus contains a fascinating article that explains some of the key principles of behavioral economics (BE) and demonstrates their application to claims management.

BE theory asserts that individuals make irrational decisions due to cognitive biases they are not aware of. These biases are so common that Dan Ariely coined the term ‘predictably irrational.’  BE has been a hot topic in insurance for some time and interest in it is not fading.

Clio Lawrence, the author of the article, studied a group of self-employed income protection insurance policyholders in the UK. Several BE principles were applied throughout the claims process. She concludes: “While our observations and investigations are ongoing, the anecdotal evidence and feedback has so far supported a link between the application of BE principles and claims outcomes. “