Spann & Sons Blog

Don’t Risk Being Underinsured: Five Insurance Mistakes To Avoid

Too many Americans believe that the coverage limits of their homeowners insurance policy are linked to the market value of their home, according to the Insurance Information Institute.

In the I.I.I.’s 2011 Insurance Pulse Survey, conducted by the Opinion Research Corporation, nearly half (48 percent) of survey respondents came to that mistaken conclusion.

“The real estate value of a home, that is the price you can buy or sell it for, has absolutely nothing to with the amount of insurance needed to financially protect the homeowner in the event of a fire or other disaster,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “Reducing insurance coverage because the market value of a home has decreased can result in being dangerously underinsured.”

One out of three respondents to the Pulse Survey reported that they purchased less homeowners or auto insurance as a way to save money. A better strategy would be to take a higher deductible, which can substantially reduce insurance costs. Home and car owners can then put the savings into a purchasing the right amount and type of insurance for their specific needs, pointed out Salvatore.

Another way to save money is to comparison shop, something that seven out of 10 Pulse Survey respondents said they utilized as a strategy to save on both their home and auto insurance needs.

Following are the five biggest auto, home, flood and renters insurance mistakes consumers can make, with suggestions to avert those pitfalls while still saving money:

1. Insuring a home for its real estate value rather than for the cost of rebuilding. When real estate prices go down, some homeowners may think they can reduce the amount of insurance on their home. But insurance is designed to cover the cost of rebuilding, not the sales price of the home. You should make sure that you have enough coverage to completely rebuild your home and replace your belongings.

A better way to save: Raise your deductible. An increase from $500 to $1,000 could save up to 25 percent on your premium payments.

2. Selecting an insurance company by price alone. It is important to choose a company with competitive prices, but also one that is financially sound and provides good customer service.

A better way to save: Check the financial health of a company with independent rating agencies and ask friends and family for recommendations. You should select an insurance company that will respond to your needs and handle claims fairly and efficiently.

3. Dropping flood insurance. Damage from flooding is not covered under standard homeowners and renters insurance policies. Coverage is available from the National Flood Insurance Program (NFIP), as well as from some private insurance companies. Many homeowners are unaware they are at risk for flooding, but in fact 25 percent of all flood losses occur in low risk areas. Furthermore with the significant snow fall this winter, spring related flooding may be particularly severe, thus increasing the importance of purchasing flood insurance.

A better way to save: Before purchasing a home, check with the NFIP to determine whether the property is situated in a flood zone; if so, consider a less risky area. If you are already living in a designated flood zone, look at mitigation efforts that can reduce your risk of flood damage and consider purchasing flood insurance. Additional information on flood insurance can be found at www.FloodSmart.gov.

4. Only purchasing the legally required amount of liability for your car. In today’s litigious society, buying only the minimum amount of liability means you are likely to pay more out-of-pocket if you are sued—and those costs may be steep.

A better way to save: Consider dropping collision and/or comprehensive coverage on older cars worth less than $1,000. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.

5. Neglecting to buy renters insurance. A renters insurance policy covers your possessions and additional living expenses if you have to move out due to an insured disaster, such as a fire or hurricane. Equally important, it provides liability protection in the event someone is injured in your home and decides to sue.
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Spring Tornadoes Are Generally the Most Severe; Make Sure You’re Insured

NEW YORK, April 18, 2011 — The tornadoes that swept through the Midwest, the Great Plains states and the South over the past two weekends are a vivid reminder of the threat these windstorms pose to life and property, and the importance of having the right coverage, according to the Insurance Information Institute (I.I.I.).

Tornado season in the U.S. generally runs from April through July, but those that form in the spring tend to be more severe. Twisters often cause the most damage and loss of life in the densely populated southeastern states, and in the Great Plains states.

“The recent devastation, spread across multiple states, demonstrates the need for everyone to prepare for severe weather events,” said Michael Barry, vice president of Media Relations for the I.I.I. “No matter where you live, you need to have the right amount, and type, of insurance in order to recover financially after a natural disaster.”

A tornado is a violently rotating column of air extending from a thunderstorm to the ground, and they can occur in almost every U.S. state. Although individual tornadoes are generally not as costly as hurricanes in terms of insured losses because they strike a more limited geographic area, they do occur more frequently. About 1,200 tornadoes, with gusts of wind as high as 200 miles per hour, develop each year in the U.S. Tornado intensity is measured by the Fujita scale, which runs from 1 through 5, the higher number being the strongest. The scale is based on the maximum speed of three-second wind gusts.

The tornado that hit Mapleton, Iowa on Saturday, April 9 damaged a substantial number of homes and businesses in that community. Meanwhile, Merrill, Wisconsin, was hit by another tornado the next day, and also incurred extensive property damage. Three tornado related injuries were reported in central Wisconsin. At least three barns and one mobile home were adversely impacted by heavy winds in southeastern Minnesota on Sunday afternoon, April 10, as well, according to news accounts.

The 10 states that saw the most tornadoes last year, in order of frequency, were Minnesota (145), Texas (105), Mississippi (100), Kansas (94), Oklahoma (84), Missouri (80), North Dakota (68), Wisconsin (68), Colorado (66), and Illinois (65).

The number of U.S. tornadoes, and the fatalities they caused, rose in 2010 as compared with 2009. The National Weather Service’s Storm Prediction Center in Norman, Oklahoma, reports that there were 1,282 tornadoes in the U.S. in 2010, up from 1,156 in 2009. Moreover, tornado related fatalities reached 45 in 2010 up from 21 deaths in 2009.

HAVING SUFFICIENT COVERAGE
Standard homeowners and business insurance policies cover wind damage, including that caused by tornadoes, to the structure of the building and its contents. However, you should make sure your coverage limits reflect the cost of rebuilding the structure, and of fully replacing your personal belongings.

Homeowners insurance policies also provide for additional living expenses (ALE). ALE coverage pays the costs of living away from home if you cannot inhabit your house due to damage from an insured disaster. The policy’s ALE provision covers hotel bills, restaurant meals and other living expenses incurred while your home is being repaired or rebuilt.

If you own a business that has been damaged, business income (also known as business interruption) insurance, covers the profits your business would have earned, based on your own financial records, had the disaster not occurred. This also covers additional operating expenses incurred as a result of the disaster, such as the extra expenses involved in operating out of a temporary location. Damage to cars from a tornado is covered under the optional comprehensive portion of a standard auto insurance policy. The I.I.I. offers the following tips for preparing for, and dealing with, a tornado.

BEFORE A TORNADO
If a tornado watch has been issued, move cars inside a garage or carport to avoid damage from hail, which often accompanies tornadoes. Keep your car keys and house keys with you at all times. Move lawn furniture and yard equipment, such as lawnmowers, inside. Aside from being damaged themselves, such items can also act as dangerous projectiles, causing serious harm to nearby people and property.

A tornado watch means that weather conditions are favorable for tornadoes and a tornado warning means one has been spotted in your area. Be sure to always have an up-to-date inventory of your possessions and store it in a safe place, with at least one copy off the premises—in a safe deposit box, or with an online storage service. To help with this task, the I.I.I.’s free online home inventory software is available at KnowYourStuff.org.

In addition, the Insurance Institute for Business & Home Safety (IBHS) has information on How to Reduce Risks from a Tornado and the Federal Emergency Management Administration has compiled a brochure on pre-tornado planning, Taking Shelter from the Storm: Building a Safe Room for Your Home or Small Business.

DURING A TORNADO
Do not open windows as you will put yourself at risk of injury from breaking glass. You also may make the damage to your home worse by giving wind and rain a greater chance of getting inside.

If you are in your car, abandon your vehicle and seek shelter in the nearest ditch if no other facility is available. Do not get under a bridge or overpass. You are safer in a low, flat location. If you live in a mobile home, you should vacate the premises and seek shelter elsewhere.

AFTER A TORNADO
The I.I.I. offers the following advice to speed the insurance claims settlement process following a tornado:
Be prepared to give your agent or insurance company representative a detailed description of the damage to your property. Your agent will report the loss to your insurance company or to a qualified adjuster who will contact you as soon as possible in order to arrange an inspection of the site.

If it is safe to access the area, take photographs of the damaged property. Visual documentation will help with the claims process and can assist the adjuster in the investigation.

Prepare a detailed inventory of all damaged or destroyed personal property. Make two copies—one for yourself and one for the adjuster. Your list should be as complete as possible, including a description of the items, dates of purchase or approximate age, cost at time of purchase and estimated replacement cost.

Collect canceled checks, invoices, receipts or other papers that will assist the adjuster in obtaining the value of the destroyed property.

Make whatever temporary repairs you can. Cover broken windows and damaged roofs and walls to prevent further destruction. Save the receipts for any supplies and materials you purchase as your insurance company will reimburse you for reasonable expenses in making temporary repairs.

Secure a detailed estimate for permanent repairs to your home or business from a licensed contractor and give it to the adjuster. The estimate should contain the proposed repairs, repair costs and replacement prices.

If your home is severely damaged and you need to find other accommodations while repairs are being made, keep a record of all expenses, such as hotel and restaurant receipts.
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Warning Signs of Fraud

If you have been involved in an auto accident that just didn’t feel right, it might not have been an accident at all. More and more criminals are devising elaborate staged vehicle accidents—complete with fake injuries—to collect on insurance policies, according to theInsurance Information Institute(I.I.I.). Not only can these staged accidents cost honest policyholders and auto insurers billions of dollars annually, but they create unsafe conditions on roads and highways—particularly when the scheme goes wrong.

Staged accidents aren’t the only way to defraud consumers. Fraud may be committed by a number of different parties involved in an insurance transaction: applicants for insurance; policyholders; third-party claimants; and professionals who provide services and equipment to claimants. In addition to staged accidents, common fraud practices include “padding,” or inflating actual claims; misrepresenting facts on an insurance application; and submitting claims for injuries or damage that never occurred, services never rendered or equipment never delivered.

Fraudulent automobile accidents occur more frequently in urban areas, where there is a greater number of vehicles, and in wealthier communities because drivers there are perceived to have better insurance coverage, the National Insurance Crime Bureau (NICB) noted. Criminals often target new, rental or commercial vehicles because they are typically well insured. Furthermore, criminals tend to prey on women driving alone and senior citizens since they are perceived to cause fewer problems and are less likely to be confrontational at accident scenes.

Such organized scams are especially common in states that have so-called “no-fault” auto insurance, a term used loosely to denote any auto insurance program that allows policyholders to recover financial losses from their own insurance company, regardless of fault. Twelve U.S. states have no-fault auto insurance laws, with Florida topping the list of no-fault states with questionable claims involving staged accidents.

The best defense against becoming involved in a staged accident and auto insurance fraud is to know what to look for. According to NICB, here are some of the more common staged accident scenarios:

   • Swoop and Squat: Usually involves three vehicles; two are driven by
     criminals, the other is the victim. The driver of the “squat” vehicle positions his vehicle in
     front of the victim’s car. The driver of the “swoop vehicle” pulls ahead of the squat vehicle
     and internationally cuts it off, thus causing the squat vehicle driver to hit his breaks. The
     victim cannot react in time and rear ends the squat vehicle. The swoop vehicle races off and
     is not seen again. The innocent motorist states the swoop vehicle caused the accident, but
     because that driver cannot be located, the victim has to pay the vehicle damage and
     personal injury claims of passengers in the squat vehicle.

   • Side Swipe: Typically occurs at busy intersections with dual left turn lanes.
     The criminal positions his vehicle in the outer lane. As soon as the victim’s vehicle drifts into
     the outer turn lane, the criminal side-swipes it.

   • Panic stop: Here the criminal typically drives an older vehicle filled with
     passengers. The criminal positions his car in front of the victim’s while a backseat passenger
     in the criminal’s vehicle watches and waits for the innocent motorist to be distracted, for
     example, by a cellphone call. As soon as the victim is distracted, the driver slams on the
     brakes, causing the innocent motorist to rear-end the criminal’s vehicle. The victim’s
     insurance company must pay for vehicle damage as well as injuries that the passengers may
     claim to have suffered from the accident.

   • Drive down: In this scheme, the victim merges his vehicle into traffic after
     being motioned to do so by the criminal. As the innocent driver begins to merge, the criminal
     speeds up and causes a
     collision. When questioned, the criminal denies motioning the victim to merge into traffic or
     gives excuses.

Here are some warning signs that fraud is being perpetrated:

   • People who suddenly appear at an accident scene and try to direct you to specific doctors and
     attorneys—these so-called “runners” are usually part of the criminal scheme as well.

   • Physicians who insist you file a personal injury claim after an accident, especially if you are not
     hurt.

   • Tow trucks that arrive on the scene without anyone having called them. These tow trucks
     might be working in concert with unscrupulous medical or legal providers.

If you have been in such an accident and suspect fraud:
Call the police or highway patrol. Trust your instincts. Let the police know you suspect fraud. Obtain a police report with the officer’s name, even if the damage is minimal. If the report describes damage to the claimant’s car as a “nick,” it is harder for criminals to intentionally damage the car later and try to collect a larger claim against your insurance policy.

Contact your insurance agent or company representative as soon as possible, regardless of who is at fault. Even if the accident appears minor, it is important that you let your insurance company know about the incident. Let them know you suspect fraud and why.

Call the NICB’s toll-free hotline at 1-800-TEL-NICB (1-800-835-6422). Your call can be anonymous and could be eligible for a reward.

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A Word from Your Agent

We’ve had a very busy start to the Spring of 2011!

First off, we recently merged the two agency locations into one at BJ’s Metro Mall in Middle Village, NY.  Secondly, we’re in the process of completely renovating the Metro Mall Agency office.  This has required us to close the past few weekends to paint and replace carpet, but the good news is you will be serviced in a cleaner and more professional environment the next time you come by the office.

Donna Amann has joined the Metro Mall Office and will be a primary Customer Service Representative. Donna is a lifelong resident of Richmond Hill and she knows many of the families in the area.  J. Matthews and Nancy Seda will both remain with the agency and Ray Wolter, our Financial Specialist, will continue to prepare our customers for the uncertainties of the future with life insurance and retirement funding products.

Expect a phone call and/or a “Call Me” card from my staff and the coming weeks. We’re contacting everyone to make sure we have current phone numbers, e-mail addresses and emergency contact information.  Also, we have some exciting new products, services and discounts that we want you to take advantage of!  As always, please call, e-mail or stop by if you need anything at all.

Winning with you,
Abraham “Kevin” Spann

Allstate Asks for Legislative Response to Demonstrated Increase in Suspicious Insurance Claims, as Reported Today by the National Insurance Crime Bureau

Allstate is responding to a report issued today by the National Insurance Crime Bureau (NICB) that shows a double-digit percentage increase in questionable claims (QC) over the last two years inNew York State. According to the NICB, faked and/or exaggerated injuries and excessive treatments are leading the increase.

Krista Conte, New York spokesperson for Allstate Insurance Company, said in response to the report:

“We commend the NICB on their efforts to fight fraud and raise awareness about this issue, which is extremely important to all New Yorkers.

“Not only is no-fault fraud, or auto accident fraud, costing New York consumers and insurers hundreds of millions of dollars, it puts drivers at risk. Those who would commit this type of crime are taking advantage of the broken no-fault system and are organized, calculating and part of a big business. They are gaming the auto insurance system and the victims are honest, hard working New Yorkers.

“Without the support of lawmakers, incidents of fraud will continue to increase and insurance costs will rise. Responsible citizens are the victims. Enacting meaningful reform of the no-fault system is an important way to fight this expensive and dangerous crime.”

The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer. Widely known through the “You’re In Good Hands With Allstate®” slogan, Allstate is reinventing protection and retirement to help nearly 16 million households insure what they have today and better prepare for tomorrow. Consumers access Allstate insurance products (auto, home, life and retirement) and services through Allstate agencies, independent agencies, and Allstate exclusive financial representatives in the U.S. and Canada, as well as via www.allstate.com and 1-800 Allstate®.
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New Penalty: Drivers Caught Texting Get 2 Points

Drivers caught talking or texting on their cell phones now face another punishment: two points on their license.

The new punishment imposed by the state Department of Motor Vehicles takes effect today. Points can lead to higher auto insurance costs and a suspension of a driver’s license if a person gets 11 points within 18 months.

It has been illegal to use a cell phone without a hands-free accessory since 2001 in New York. The law was enforced only with a ticket and fine up until now. But the DMV decided to add the points punishment to reduce the number of distracted driving incidents.

According to the DMV, driver distraction contributes to at least one of five crashes statewide.

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Fraud Cost Facts

Since the end of 2004, the average amount paid for medical claims related to automobile accidents in New York rose 60.4 percent, nearly 42 points faster than the 18.6 percent growth rate in the Consumer Price Index (CPI) cost of medical goods and services found in the region. One primary explanation for such a wide discrepancy is automobile insurance fraud committed by medical providers in New York, which remains on the upswing, forcing consumers to pay more for auto insurance.

Fraud and lawsuit abuse by medical providers force New Yorkers to pay significantly higher insurance rates

Automobile insurance fraud in New York is once again on the upswing and it’s costing you money each and every day. It is estimated that no-fault fraud costs New Yorkers $229 million in 2009. The New York Alliance Against Insurance Fraud reports that excessive billings by medical mills, fraudulent companies that provide few if any real health care services to the public, are a key factor in driving New York State’s no-fault automobile insurance fraud crisis.

What this means to New Yorkers:
   • You pay the third highest automobile liability premiums in the nation.

   • You pay 53 percent more for auto liability insurance than the national average.

   • You pay 25 percent more than drivers in other no-fault states.

   • Drivers in the Bronx pay almost six-and-a-half more for no-fault auto insurance than someone
     living in Albany.

No-Fault costs are surging:
   • New York’s average no-fault claim cost is 64 percent higher than the national median of $5,289.

   • The average claim has increased by $3,075, or 55 percent, since 2004.

   • The medical cost of the average claim has increased much faster than health care costs since
     2004 (60.4 percent compared to 18.6 percent).

   • Health care charges Downstate have risen 40 percent since 2006, while charges Upstate have
     fallen by 16 percent. The average yearly amount charged for treating no-fault victims is roughly 3
     times higher Downstate than Upstate.

Fraud Costs New York:
   • These higher costs and premiums primarily impact the Downstate region of New York City,
     Nassau, Suffolk, Westchester Counties and Queens, Manhattan and Staten Island.

   • Some unscrupulous health care providers in Downstate New York are gaming the no-fault
     system by encouraging often unnecessary and excessive use of health care services and
     abusing the legal system.

   • Rampant fraud contributes to New York City’s higher-than-average medical losses per claim
     and higher-than-average no-fault rates.

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Allstate Insurance Company Files $2.9 Million Fraud Case Against Fraudulent Medical Corporations

As detailed in a lawsuit filed November 17, 2010, its sixth this year, Allstate Insurance Company seeks to prove that professional service corporations were actually owned and operated by a layperson, rather than by licensed physicians or medical professionals. Allstate is committed to fight insurance fraud in New York and has sought to recover damages totaling $9,899,093.56 during 2010. Since 2003, Allstate has filed 23 fraud lawsuits in New York, seeking damages totaling $144,258,263.56.

Allstate filed this latest lawsuit against Robert David Solomon, M.D., Charles Leo Cooper, M.D., Natalia Gurevich, M.D., Aviyon Medical Rehabilitation, LLC, Primavera Medical Rehabilitation, PLLC, Competent Medical Rehabilitation, PLLC, Trastevere Medical Rehabilitation, PLLC, Dr. Natalia Gurevich Medical, P.C., Main Diagnostic Medical, P.C., Sharp Imaging Radiology, P.C., Sharp Radiology, P.C., Rapid Scan Radiology, P.C., Snoop Radiology Imaging, P.C., Arthur Bogoraz and Matthew Abramowitz. The complaint was filed in the United States District Court, Eastern District of New York, alleging that the professional service corporations filed false ownership documents with the New York Department of State, Division of Corporations. The complaint claims that the professional service corporations lack standing to recover no-fault auto insurance benefit payments from Allstate Insurance Company based upon violations of the New York Business Corporation Law, which requires that professional service corporations be owned and operated by a licensed physician or medical professional.

As detailed in its lawsuit, Allstate intends to prove that the professional service corporations submitting numerous claims to Allstate Insurance Company were actually owned and operated by layperson Arthur Bogoraz, instead of licensed physicians or medical professionals. The aggregate of those claims resulted in payments to the professional service corporations in excess of $2.9 million dollars. Allstate seeks reimbursement for the full amount.

“Allstate is aware of the economic pressures that consumers face, said Jim Murray, Allstate Assistant Vice President in charge of the company’s Special Investigation Unit. “Insurance fraud adds to the cost of the product, and Allstate is aggressively pursuing the fight against insurance fraud to protect consumers and help keep insurance costs down.”

The Allstate Corporation (NYSE: ALL) is the nation’s largest publicly held personal lines insurer. Widely known through the “You’re In Good Hands With Allstate®” slogan, Allstate is reinventing protection and retirement to help more than 17 million households insure what they have today and better prepare for tomorrow. Consumers access Allstate insurance products (auto, home, life and retirement) and services through Allstate agencies, independent agencies, and Allstate exclusive financial representatives in the U.S. and Canada, as well as via www.allstate.com and 1-800 Allstate®.

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Insurance Coverage for Engagement Rings an Important Step

It can be easy in the fresh afterglow of getting engaged to forget a number of things, including one’s own name and how to tie a pair of shoes. However, experts at TheKnot.com say it’s important to remember insurance coverage for valuable engagement rings.

Fortunately for newly engaged couples, the process generally isn’t difficult, TheKnot.com says. Most of the time, a rider can be purchased for a home insurance or renters insurance policy, which will add a small amount to a monthly bill in exchange for covering the ring if lost or stolen.

However, if for some reason this isn’t possible, TheKnot.com says couples can turn to a specialty insurer for a stand-alone jewelry insurance policy. In either case, policyholders should keep receipts and be prepared to have the ring appraised.

While a lost engagement ring can never be truly replaced, ring insurance can help ease the financial pain, experts say.
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New York Raises Penalty for Using a Mobile While Driving

New York has raised the penalty for motorists caught using a mobile while driving and not using a hands-free unit . Now, two points will be imposed on the driving records of those caught.

Previously, no points were assigned for talking on a cell phone although two points are assigned for texting while driving violations. The new regulation will align the point penalty for both violations. Drivers who collect 11 penalty points in 18 months face a temporary loss of their license.

In November 2001, New York became the first in the nation to adopt a state-wide ban on handheld cell phone use while driving and established a fine for the violation of up to US$100.

In November 2009, a law eliminating the use of portable electronic devices for texting while driving took effect, a violation that currently has two points attached to it along with a US$150 fine. The new change applies the penalty points in addition to the financial fine.

According to DMV Executive Deputy Commissioner, J. David Sampson, distracted driving is one of the most serious dangers on their roadways today. By strengthening the current law, their hope is that motorists will become even more aware of the potential consequences of their actions if they use a cell phone while driving.

In New York State, driver distraction is estimated to be a contributing factor in at least one out of five crashes. Each year, over 300,000 tickets are issued statewide for cell phone violations. In 2009, nearly 5,500 people died nationwide in crashes involving a distracted or inattentive driver and more than 440,000 were injured.

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