Nearly one third (31 percent) of Americans don’t know how much their most valuable assets — their homes — are insured for, and an additional 46 percent don’t know how much coverage they have for their homes’ contents, such as furniture and clothing, say the results of a survey by Zogby International for MetLife Auto & Home. Additionally, many homeowners aren’t aware of coverage overlaps that may exist, which could result in opportunities to save money.

The first of a two-part “Insurance Literacy” survey, tested consumer knowledge of insurance basics, including homeowners, condo, and renter’s insurance.

Common misconceptions that could lead to coverage gaps were:

– Thirty percent of homeowners believe their insurance coverage is based on the current market value of their home. Actually, the available coverage limit for homeowners insurance is based on the cost to rebuild the home, a mistake that could lead to confusion for homeowners trying to evaluate whether they have the right amount of insurance.

– More than two thirds (71 percent) of those surveyed believe insurance pays for the full cost to rebuild their property in the event of a major loss, such as a fire or other natural disaster. But nearly all insurance companies “cap” the amount paid to rebuild the dwelling following a total loss, unless additional coverage is purchased. Furthermore, the coverage is subject to a deductible, and certain causes of loss, such as water damage caused by the natural disasters of flooding, are excluded completely.

– Almost three-quarters (73 percent) believe insurance will pay the full cost to replace personal belongings in the event of a loss. However, depreciation is usually factored in, unless optional replacement coverage is selected, and the coverage, regardless of the chosen settlement method, is subject to a deductible.

– Sixty percent believe insurance will pay for the full cost of replacing valuables, such as jewelry and collectibles. Most insurance policies contain a payment cap for replacing valuables, although additional coverage can be purchased, and the coverage is subject to a deductible.

– For a major loss, nearly two-thirds (64 percent) of those surveyed expect their insurance to cover any building code mandated upgrades that are necessary. Without an endorsement/rider, most home insurance does not cover required upgrades located in an undamaged portion of the home.

“More than two-thirds of consumers surveyed also said they’d rather pay a higher premium than be told that a loss isn’t covered,” said Bill Moore, president of MetLife Auto & Home. “To ensure this doesn’t happen, consumers can find the best value by learning more about their policies and selecting the coverage that best meets their needs, rather than simply shopping for the lowest premium.”

On a positive note, with purse strings tight, opportunities exist for consumers to become more aware of what their current policies do cover in the event of a loss, to avoid insurance overlaps and unnecessary out-of-pocket expenses. For example:

– Electronically downloaded and stored entertainment, such as music, ring tones, etc., can be expensive to replace without easy access to free re-downloads. However, more than 90 percent of homeowners didn’t know that insurance can extend coverage to electronic data.

– Almost half (47 percent) didn’t realize there’s no need to secure additional coverage to insure the personal property of college-age children living on campus. This is covered under the standard homeowners contract, subject to its terms and conditions.

– Many homeowners would be surprised to learn that damage to appliances and wiring from a power surge would be covered by their insurance policy. More than half (59 percent) didn’t think it would — limiting out-of-pocket expenses to a deductible.

Natural Disasters

Many homeowners exhibit confusion about insurance coverage for natural disasters and unforeseen occurrences. The majority of homeowners understand that flood damage is written on a separate policy from their standard insurance policies. However, many consumers are still misinformed — or unsure — about the coverage available for other types of events.

In some cases, homeowners are aware of the potential for a loss, but don’t realize what coverage they have against a particular hazard. Among other things:

– Although 83 percent believe foundation damage from earth movement is very serious or somewhat serious, only 37 percent know they aren’t covered for this under the standard homeowners policy.

– More than a quarter (28 percent) incorrectly believe they’d be covered for an earthquake or volcanic eruption, and the same amount aren’t sure one way or the other. Most standard policies exclude this peril.

– For water damage from a sewer or sump-pump back up, 67 percent of homeowners believe this would be covered. Without the appropriate rider, most policies don’t cover this.

The Zogby/MetLife Auto & Home homeowners insurance survey sample consisted of interviews with 1,196 adults who have homeowners, condo, or renter’s insurance, and who are living in a household with a telephone. The interviewing was conducted May 26, to June 9, 2010.

Source: MetLife Inc.

Read more: http://www.insurancejournal.com/news/national/2010/08/24/112704.htm#ixzz0xdWnKiaD

That’s according to insurer ACE Private Risk Services.

“If you scheduled a 24-karat gold bracelet on your insurance policy for $3,000 ten years ago, it could be worth over $12,000 now, since the price of gold has quadrupled over that period,” said Robert Courtemanche, chief executive officer, ACE Private Risk Services. “Multiply that one piece many times for high net worth consumers, who often have extensive jewelry collections, and you could be talking about an insurance gap approaching or exceeding six figures if they haven’t updated coverage.”

The issues are addressed in a white paper from ACE Private Risk Services titled, “Does Your Valuables Coverage Meet the Gold Standard?”

The white paper contends many affluent consumers have not realized how much their jewelry and precious metals items have appreciated, so they haven’t adjusted their insurance coverage to reflect these higher values.

“Historically, we have seen clients underinsured by 40 to 60 percent across all categories of valuable articles, including jewelry,” said Gerald Escobar, principal of Asset Archives, a global appraisal firm based in Atlanta, Ga.

Similarly, an insurance organization survey of those owning a valuables collection – such as gold jewelry, fine art, or antiques – found that 47 percent did not have special insurance coverage for their collections.

“Affluent consumers should also consider the semi-precious jewelry they haven’t scheduled,” added Courtemanche. “These items may have appreciated to the point where their aggregate value exceeds the coverage limits for jewelry in their homeowners policies.” In such cases, blanket coverage offered by valuables policies geared to affluent clients may be the best solution. Blanket coverage allows a collection of similar items of moderate value to be covered as a whole, eliminating the tedium of scheduling each item individually.

The insurer recommends three steps that affluent consumers can take to protect their jewelry and other precious metals items:

Update inventory. A current inventory is not only critical when losses occur, or when a major move is planned, it is imperative if it’s been several years since gold necklaces, watches, and other precious metal items have been appraised.

Review and adjust existing policy. Compare the values in an updated inventory with the coverage limits in the existing homeowners and valuables policies. Homeowners policies have special limits on the amounts they will pay for jewelry and other collectible items. Purchasing additional protection through a valuables policy on an individual (scheduled) or blanket basis is often necessary.

Repeat steps 1 and 2 as part of an annual insurance review. The best and easiest way to keep valuables well protected, is to partner with an insurance agent for a once-a-year review of all insurance needs.
The white paper also discusses different kinds of valuables insurance coverages, as well as tips for managing the cost of coverage for jewelry.

Read more: http://www.insurancejournal.com/news/national/2010/08/11/112333.htm#ixzz0wKgD3wnj

Paintings and works of art on paper expand and contract in response to changes in temperature and humidity, say experts with Chubb Group of Insurance Cos. That can cause surface distortions, flaking paint, growth of mold, staining or decay.

It’s not only the summer months that pose a threat to cherished pieces, either. Furniture and gilded frames can dry and shrink during the winter, while wood absorbs moisture when it’s humid. If the gesso primer layer beneath your frame isn’t thick enough to flex with the expansion and contraction of the wood, then it will flake and detach.

Chubb gives these tips to protect art from deterioration:

Keep the temperature and humidity in your home as constant as possible, around 60 to 80 degrees and 55 to 65 percent relative humidity. Use an air conditioner in the summer and a humidifier throughout the winter.
Keep art out of direct sunlight. Ultraviolet light will cause severe and often irreversible damage to art, especially paper, textiles and photographs. Shut off all lights when the room is not being used and keep curtains or shades drawn.
Never hang artwork or a valuable object over a fireplace. Heat, smoke and ash can easily ruin them.
Do not store fine art in basements or attics. These areas are prone to dramatic temperature changes, flooding and leaks. If possible, create an art closet with horizontal racks and a locked door. Wrap and store framed artwork face to back, in a vertical position.
Frame all art, especially paper, textiles and photographs, with museum-quality materials, and hire a recommended art hanger. Shatter-resistant fronts can shield damaging UV rays and other exposures, while corrugated polypropylene backings protect against water-absorption. A professional art hanger, meanwhile, is more likely to use the proper hardware and structural supports than a general contractor.
Install water alert sensors in areas of your home susceptible to water damage. These areas include above ceiling trays, underneath washers and dryers and radiators.

Read more: http://www.insurancejournal.com/news/national/2010/08/10/112277.htm#ixzz0wJdGYnLu

The National Oceanic and Atmospheric Administration (NOAA) said it now anticipates 14 to 20 tropical storms, with eight to 12 expected to strengthen into hurricanes.

Four to six of these storms are expected to become “major” hurricanes, which are defined as Category 3 or higher and can have winds of more than 110 mph.

In their previous forecast, NOAA had forecasted 14 to 23 tropical storms, with eight to 14 developing into hurricanes, and three to seven escalating into major hurricanes.

The revision comes as a result of a lower-than-expected number of storms during June and July.

So far, the 2010 season has seen just three tropical storms, with only one reaching hurricane strength.

According to Gerry Bell, the lead hurricane seasonal forecaster with NOAA’s Climate Prediction Season, “We’re still predicting a very active hurricane season, and it’s very important that people understand that.”

The CSU team saw a 75 percent probability of a major hurricane making landfall along the U.S. coastline.

The 2010 Atlantic hurricane season has been predicted to be very active, with one private forecaster, Weather Services International (WSI), foreseeing 20 named storms, 11 hurricanes and five intense hurricanes of Category 3 or greater. This is significantly above the long-term average taken between 1950-2009 which shows 10 named storms, six hurricanes and two intense hurricanes.

In addition to the risk that major hurricanes can pose to about one-quarter of U.S. oil production and more than a tenth of natural gas output offshore in the Gulf of Mexico, this year’s storms threaten to complicate efforts to address the environmental disaster of BP’s blown-out oil well.

Although the ruptured Macondo seabed well was provisionally capped in mid-July, halting the leak of oil from it into the Gulf of Mexico, storms could still disrupt ongoing efforts to ”kill” the well with a permanent plug.

All of the major forecasters see a much more active season than last year’s season, which was one of the quietest in a decade with just nine tropical storms.

There have already been three named storms this season, Alex, Bonnie and Colin. Alex, the season’s first hurricane so far, drenched the Texas-Mexico border on April 1 as it made landfall as a Category 2 storm.

The season is just approaching its traditional busy phase, which runs from mid-August to October.

Read more: http://www.insurancejournal.com/news/national/2010/08/05/112214.htm#ixzz0vq1VrTzI

New public opinion survey findings from the Insurance Research Council (IRC) indicate that 26 percent of those surveyed said that allowing such lawsuits was a poor idea, and 31 percent said it was only a fair idea.

A first-party bad-faith lawsuit is one where individuals sue their own insurance company because they believe the company acted in “bad faith” in the settlement of their claim. Only a few states allow individuals to sue their own insurance company in this manner, although several states have recently debated, and rejected, legislation authorizing first-party bad-faith lawsuits.

The survey also asked whether respondents would be willing to pay more for insurance in order to allow first-party bad-faith lawsuits. Forty-seven percent said they were “not at all willing” to pay more and 24 percent said they were “not very willing” to pay more. Even among those who thought that allowing first-party bad-faith lawsuits was a good or an excellent idea, one-half (51 percent) said they were unwilling to pay more for insurance in order to allow the lawsuits.

“These findings indicate a substantial lack of public support for legislation that would generate more lawsuits and higher costs for insurance consumers,” said Elizabeth Sprinkel, senior vice president of the IRC.

Read more: http://www.insurancejournal.com/news/national/2010/07/29/112009.htm#ixzz0vBHKxVMN

Across the entire Atlantic Basin for the six-month season, which begins June 1, NOAA (National Oceanic and Atmospheric Administration) is projecting a 70 percent probability of the following ranges:

14 to 23 named storms (top winds of 39 mph or higher), including:
8 to 14 hurricanes (top winds of 74 mph or higher), of which:
3 to 7 could be major hurricanes (category 3, 4 or 5; winds of at least 111 mph)
“If this outlook holds true, this season could be one of the more active on record,” said Jane Lubchenco, Ph.D., under secretary of commerce for oceans and atmosphere and NOAA administrator. “The greater likelihood of storms brings an increased risk of a landfall. In short, we urge everyone to be prepared.”

The outlook ranges exceed the seasonal average of 11 named storms, six hurricanes and two major hurricanes.

According to NOAA, the expected factors supporting this outlook are:

Upper atmospheric winds conducive for storms. Wind shear, which can tear apart storms, will be weaker since El Niño in the eastern Pacific has dissipated. Strong wind shear helped suppress storm development during the 2009 hurricane season.

Warm Atlantic Ocean water. Sea surface temperatures are expected to remain above average where storms often develop and move across the Atlantic. Record warm temperatures – up to four degrees Fahrenheit above average – are now present in this region.

High activity era continues. Since 1995, the tropical multi-decadal signal has brought favorable ocean and atmospheric conditions in sync, leading to more active hurricane seasons. Eight of the last 15 seasons rank in the top ten for the most named storms with 2005 in first place with 28 named storms.

“The main uncertainty in this outlook is how much above normal the season will be. Whether or not we approach the high end of the predicted ranges depends partly on whether or not La Niña develops this summer,” said Gerry Bell, Ph.D., lead seasonal hurricane forecaster at NOAA’s Climate Prediction Center. “At present we are in a neutral state, but conditions are becoming increasingly favorable for La Niña to develop.”

FEMA Ready
Meanwhile, the Federal Emergency Management Agency is urging residents to prepare.

“FEMA is working across the administration and with our state and local partners to ensure we’re prepared for hurricane season,” said FEMA Administrator Craig Fugate. “But we can only be as prepared as the public, so it’s important that families and businesses in coastal communities take steps now to be ready. These include developing a communications plan, putting together a kit, and staying informed of the latest forecasts and local emergency plans. You can’t control when a hurricane or other emergency may happen, but you can make sure you’re ready.”

President Obama recently designated May 23 through 29 as National Hurricane Preparedness Week. NOAA and FEMA encourage those living in hurricane-prone states to use this time to review their overall preparedness. More information on individual and family preparedness can be found at http://www.Ready.gov and http://www.hurricanes.gov/prepare.

NOAA said its scientists will continue to monitor evolving conditions in the tropics and will issue an updated hurricane outlook in early August, just prior to what is historically the peak period for hurricane activity.

Read more: http://www.insurancejournal.com/news/national/2010/05/27/110239.htm#ixzz0pu54dqxt

The unanimous Senate vote sent the measure to President Barack Obama for his signature. The House had previously approved reauthorization.

Once President Obama signs the bill into law, the NFIP should return to normal operations, according to the Independent Insurance Agents & Brokers of America (the Big “I”). Also, since the extension is retroactive, any new policy applications or renewals that were signed and submitted during the hiatus will be effective from the date of application or, in the case of waiting periods, the waiting period will start from the date of application.

The Big “I” said that while the resumption of the program is welcome, the spring lapse — the third time this year it has been forced to halt operations– has caused difficulties for homeowners and small businesses.

“It is alarming that the NFIP was allowed to remain expired for so long, causing so much confusion and potentially leaving desperate homeowners and small businesses unprotected for almost a month,” said Robert Rusbuldt, Big “I” president and CEO. “While the Big ‘I’ is appreciative of Congress extending the program on a temporary basis, we are also greatly concerned that these short expiration periods and patchwork of temporary extensions will negatively impact the market.”

The industry has urged Congress to enact a long term extension of the program.

“The hurricane season runs two months beyond the NFIP’s new Sept. 30 expiration date,” said Jimi Grande, National Association of Mutual Insurance Companies (NAMIC) senior vice president of federal and political affairs. “Congress must not let the program lapse again, but that’s just the minimum. The best thing they can do is take this time to pass legislation that would implement common sense reforms and help the NFIP make the first steps towards financial soundness.”

HR 5114, sponsored by Rep. Maxine Waters, D-Calif., is awaiting action by the House and would reauthorize the NFIP for five years.

Read more: http://www.insurancejournal.com/news/national/2010/07/01/111226.htm#ixzz0sRmFmA6x

Forecasters also said that at least three of the storms would move through the region currently affected by the Gulf of Mexico oil spill.

According to AccuWeather’s chief hurricane forecaster, Joe Bastardi, the U.S. will experience its worse storms during September. “Expect eight named storms in September and three or four U.S. impacts.”

Forecasters are predicting more activity in part because sea temperatures are higher than normal west of Africa, while activity related to El Nino, which can act to retard Atlantic hurricane activity, has declined.

The U.S. National Oceanographic and Atmospheric Administration (NOAA) is also predicting an active season, forecasting 14 to 23 named storms. The most active season on record occurred in 2005, when there were 28 named storms, including Hurricane Katrina.

The program has been suspended from issuing new policies since May 31. Reauthorization provisions have been embedded in controversial legislation on jobless benefits and tax breaks that has been twice voted down in the Senate.

The newly-passed House bill, HR 5569, was sponsored Rep. Maxine Waters, D-Calif., and Rep. Walter Jones, R-N.C.

The Senate must still act on it.

The Independent Insurance Agents and Brokers of America (Big “I”) commended the House for its vote and urged the Senate to act quickly.

“The program has been expired since May 31, putting millions of consumers at risk from the economic dangers of flood right in the midst of the hurricane season and storm season in the Midwest. The expiration has also threatened to wreak havoc in both the real estate and insurance markets during a period of great economic difficulty. It is vital that the program be extended and we therefore urge the Senate to act on this bill without delay,” said Charles Symington, Big “I” senior vice president of government affairs.

The program has been unable to issue new or renewal policies since it was shut down May 31, although it is still paying claims. It is the fourth time in the past year that the program has been interrupted due to the failure of Congress to reauthorize it for an extended period.

The Big “I” and other industry groups hope that Congress will move beyond temporary extensions and pass legislation that authorizes the program for five years and makes certain reforms to it.

Read more: http://www.insurancejournal.com/news/national/2010/06/23/111009.htm#ixzz0rhwYXnlQ