Insurance Q&A

Insurance Q&A- Insurance Experts Page: Have you ever wondered if you have all the information you need to make informed decisions on your insurance and/or benefits? Well if you're not sure, this is a great place to start. Your questions about insurance, employee benefit plans and annuities will be answered by experts in the insurance and benefits fields. To have your questions or comments addressed send them to

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Tuesday, November 03, 2009

Floodsmart from FEMA: Answers to Possible Questions Regarding the October 2009 Change

Answers to Possible Questions Regarding the October 2009 Change

On October 1, 2009, important changes to the NFIP will take effect. There will be an increase in rates, the standard deductibles, and the basic insurance limits. These combined changes will result in an average premium increase of 8 percent . Many policyholders will have questions about these changes. To help you best serve your clients, we have developed a number of “answers to possible questions” to help your customers better understand how these changes will affect them.

Q: Why are my premiums going up?
A: It is not uncommon for insurance companies to implement annual rate increases to help offset their increased costs, including inflation. The NFIP, like most insurance companies, has found it necessary to implement these important program changes to ensure that current premiums more accurately reflect the current risks.

Q: Are the rates increasing to collect the premium dollars that were used to pay for claims as a result of Hurricane Katrina?
A: No. It is a misconception that rate increases happen to offset debts attributed to Hurricane Katrina or any past event. Actually, Federal regulations clearly state that the NFIP cannot raise rates to recoup for previous losses. Simply put, NFIP premiums only reflect expected future losses and expenses. There is no charge contained in the premium to recoup past losses.

Q: Why is my deductible doubling?
A: The NFIP’s previous minimum deductibles were in place for more than 10 years. The NFIP found it necessary to discontinue the minimum deductible of $500 and increase the new standard deductibles to avoid overall larger premium increases.
It is important to remember, that in most cases the deductible is only a fraction of the average flood insurance claim, which can cost tens of thousands of dollars.

Q: Why are the basic limits of coverage on the Standard Flood Insurance Policy (SFIP) for residential and non-residential buildings increasing?
A: The NFIP takes many steps to financially prepare for future flooding. In order to do so, the basic limit of coverage, the level which sustains the most damage in a flood, needs to be brought into better alignment with the typical NFIP paid claim. If you purchase flood insurance beyond the basic limit, you will receive more coverage at a lesser charge. And, to get full replacement cost for your primary residence in the event of a flood, you must insure your building to at least 80 percent of its replacement value (or $250,000, whichever is less).

Click here for the new Flood Insurance Rate Manual that reflects these changes as well as additional information from the NFIP. Please email us at with any questions.

Monday, July 21, 2008

Umbrella Insurance Protects Your Assets

By: Jim Pretin

At some point, you have probably heard of umbrella insurance, but have no idea what it is. Well, first off, it does not cover the umbrella you protect yourself from the rain. It is a figure of speech. An umbrella policy is designed to shield you from almost everything that your home and auto insurance does not, as well as fill in gaps in coverage when the limits of your regular policy are exhausted.

Every day, there are personal lawsuits filed against ordinary citizens, with the reasons ranging from the frivolous to the justified. When and if this happens to you, you need to be prepared. More often than not, people are sued and have no extra protection to block the plaintiff from going after their personal assets in the lawsuit. To protect yourself from such a quandary, you need to have umbrella insurance.

An umbrella is often referred to as excess liability. This excess liability coverage kicks in when the underlying limits on your home or auto policy have been exhausted, or if you are sued personally for something that neither your home nor your auto insurance covers. Depending on the company, you can purchase anywhere from 1 to 5 million dollars worth of excess coverage, sometimes as high as 10 million.

The amount of coverage you select really depends on how much you are worth. If you have 5 million dollars worth of personal assets, you should get a 5 million dollar umbrella. It is not uncommon for someone to buy a 5 or 10 million dollar umbrella policy even if that number far exceeds their net worth, because the coverage is so cheap to buy.Most insurance companies will not offer you the coverage unless you have both your home and auto already insured with them. Also, the insurer will require that you maintain a certain level of liability on the home and auto policies in order to qualify for the excess policy. Usually, you must maintain at least $250,000 of bodily injury liability per person, $500,000 per accident, and $100,000 for property damage for your autos, and $500,000 of liability for your home.

The coverage is cheap. It is possible to obtain 1 million dollars worth of excess liability for as little as $120 dollars. The more cars and homes you have, the higher the price for the insurance, but the cost is still low. In addition to your home and cars, liability associated with any other conveyances you may have, such as boats, motorcycles, and other recreational vehicles, may also qualify for coverage under the umbrella, depending on the insurance company.

You are probably wondering when the umbrella would actually come into play. Here is an example: If you are involved in an auto accident where you crashed into a pedestrian who was walking on the sidewalk, resulting in medical expenses for that person that costed more than what your auto policy covered, the umbrella would be used. Or, if that pedestrian then decides to sue you for negligence and seeks punitive damages, your umbrella can be utilized to cover your legal expenses and to pay any judgements levied against you.

It is also important to understand that the excess liability covers you for all sorts of things that have nothing to do with your cars or homes. Things such as personal injury protection are covered. This includes false arrest, false imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction.

Also, some umbrella policies provide coverage for you if you are sued in connection with any charitable boards or organizations of which you are a member. You may have to contact your insurance company and pay an extra premium for this type of coverage.

I hope this has helped illuminate to you the importance of having umbrella insurance. Without it, your personal assets are totally vulnerable in any lawsuit or legal action. Talk to your agent about it and ask how much it costs. Even though multi-million dollar lawsuits are not common, they can happen. So, an umbrella is probably worth it.

For help with your Insurance needs visit

Sunday, July 20, 2008

How Dental Plans Differ from Dental Insurance

By: S. Geetha

It is unfortunate that people do not give the required attention to their teeth and dental care as they do for other kind of diseases and illnesses.

In order to minimize the costs on dental treatments and to prevent dental diseases it is good to have a dental plan to take care of all such problems.

Dental plans differ from the dental insurance by the type and feature. Almost all the dental plans take a membership fee which varies from one plan to another plan. Also, dental plans can be either offered to individuals or to the family on the whole.

The family dental plans offer higher discounts than the individual dental plans.

Before selecting the appropriate dental plan it is good to check the rates charged under different plans. Also the type of coverage provided to the dental services matters a lot while selecting the dental plans.

Dental services covered under the dental plans:Normally most of the basic dental procedures like the regular dental check ups, treatments like the cleaning procedure, oral examination, teeth filling, fluoride treatment and teeth extraction are covered by dental plans.

But, the dental plans do not cover major dental treatments like oral surgeries, restorative dental care, root canal treatments, dental implants, braces etc.

Under such circumstances the dental plans allow the policy holder to get reimbursement for the amount spent on the basic dental treatment and the other expenses should be born by the patient himself.

Certain dental plans may not allow selecting a dentist of the policy holder’s choice and the patient has to undergo dental care treatments from the dentist mentioned in the dental plan.

Hence, the policy holder before selecting the dental plan should check for a dentist present in his area and also for any schedule is mentioned in the dental plan or not. Dental plans can be availed either monthly or annually.

The annual dental plan is supposed to be more cost efficient than the monthly dental plan.

Discount dental plans:Discount dental plan is considered to be an affordable option. This dental plan offers discounts on all dental care treatments ranging from 10 – 60 percentages. It also covers dental works like braces, bridges, dentures, root canal treatments etc. This is possible by showing the membership card to the dentist while taking the dental treatment of any kind.

Reasons for choosing discount dental plans: The main reason for choosing discount dental plan is that, it is very cost effective. The premium to be paid towards the dental plan is very low in spite of the coverage being much better. The money paid up front is also very low.

Discount dental plans can be availed for even pre existing dental diseased conditions and there is no exclusion. Discount dental plans help people when they are needed and for the purpose they avail it.

There is no hassle of filling forms as the person has to present the discount card and avail discounts from the dentists. Even the dentists are happy about discount cards as their time and energy is saved. It also offers a large list of dentists to choose from. The very important aspect is that even cosmetic dentistry is covered under dental plans making them very lucrative.

S. Geetha regularly writes informative articles on dentistry, tooth whitening procedures and dental insurance.

Thursday, June 26, 2008

Getting the right Life Insurance

Q: "I need life insurance. What's the best way to shop around? "

"I'm 29, and my wife and I just had a baby! I need life insurance. What's the best way to shop around? I've seen many families that either had no life insurance or own the wrong type of life insurance."

It's great that you are taking a step to protect your family.
The first thing you need to do is understand the different types of life insurance out there.
There are two basic types of life insurance.
The first type is called "cash value life insurance." They go under the name as whole life, universal life, variable life, or a mixture of those words together.
Cash value life insurance is a term insurance plus a savings attached to it. Whole life insurance is a level term to age 100, Universal life insurance is an increasing term insurance (that means the insurance goes up internally every year) to age 100, and Variable life is also a level term to age 100, but the death benefit may increase if there is growth in the cash value. If you see the word "Variable" it means that a portion of your premiums is invested and when you are investing, you must know that there is no guarantee that there will be growth.
All cash value life policies provides protection to age 100.
But the bad news is that they are generally expensive to the average consumer and most people who buy these types of life insurance are under-insured (meaning they don't have enough coverage).
Majority of cash value life policies have a low rate of return. They usually average around 3%. The highest I ever seen was 6%. The lowest I ever seen was 1%. If you ever wanted to take money out of the cash value, you will have to borrow it and pay a loan interest on it (usually around 8%).
In some life policies, the cash value is included in the death benefit, but you have to pay more premiums to get this feature.
The second type of life insurance is known as "term insurance."
Term insurance does not build cash value, therefore premiums are very low. You can buy lots of coverage for a low amount of premiums.
There are level term policies that are as short as 1 year (you want to avoid these) and as long as 35 years. Longer term is always better since it will give you enough time to build wealth for your future.
Right now, you probably have a mortgage to pay, you have a child to take care of, and you probably have some other personal debt such as credit cards. You probably don't have much saved right now, so the need for life insurance is very high. If you die tomorrow, not only would it be emotionally devastating, it will also be financially devastating.
Which will have a longer impact on the family, their emotional loss or financial devastation?
The financial devastation because without life insurance, your child may not be able to afford college, the family will have to move out to a cheaper place, and your personal debt may go toward your spouse.
In the later years, your kids grow up and maybe move out of the home, your mortgage gets paid off, and hopefully you don't have much personal debt. So the need for life insurance is very low. You are nearing retirement, so you better have lots of money saved.
Buying term now will provide the right amount of protection needed to protect your family's income. At the same time, you want to start investing toward your future.

Friday, September 07, 2007

Federal Appeals Court in New Orleans Hears Katrina Case


insurance company invoked to deny Gulf Coast homeowners' claims after Hurricane Katrina is at the center of a case that was scheduled for a hearing Sept. 6 in a federal appeals court in New Orleans.

State Farm Fire & Casualty Co. says its policies cover damage from hurricane-force winds, but not from rising water, and has refused to pay for any damage from Katrina's monster storm surge.

The Bloomington, Ill.-based insurer also says damage from a combination of wind and rising water is excluded from coverage. Last year, however, a federal judge in Gulfport, Miss., ruled that this "anti-concurrent cause'' policy language is ambiguous and therefore can't be enforced.

In the same ruling, Judge L.T. Senter Jr. refused to throw out a lawsuit filed by John and Claire Tuepker, State Farm policyholders whose home in Long Beach, Miss., was reduced to a concrete slab by the Aug. 29, 2005, storm.

State Farm appealed Senter's ruling to the 5th U.S. Circuit Court of Appeals in New Orleans. A three-judge panel was scheduled to hear arguments Sept. 6 from attorneys on both sides of the case.

In court papers, the Tuepkers' attorneys suggest that State Farm's policies are "craftily ambiguous'' and are "woven so as to not give away their true intent.''

"Indeed, since Katrina, it has become painfully obvious that, in anticipating the risk posed by a powerful hurricane, State Farm intended all along to exclude damage ostensibly caused by a combination of water and water, the one-two punch without which a meteorological event is something other than a 'hurricane,''' the couple's attorneys wrote.

In a different case, however, the Mississippi Court of Appeals found that State Farm's anti-concurrent cause language is "clear'' and unambiguous, the company's attorneys say.

"Courts in many other jurisdictions have likewise upheld the validity of this same language,'' State Farm attorneys wrote in court papers.

The Tuepkers are among thousands of homeowners in Mississippi and Louisiana who have sued their insurers after the Aug. 29, 2005, storm. The couple is represented by attorney Richard "Dickie'' Scruggs, who helped negotiate a multibillion dollar settlement with tobacco companies in the mid-1990s.

Last month, Scruggs appeared before a different three-judge panel of the 5th Circuit to challenge similar language in policies written by Nationwide Mutual Insurance Co. But the judges sided with Nationwide, ruling Aug. 30 that the Columbus, Ohio-based insurer's policy language isn't ambiguous.

David Rossmiller, a Portland, Ore.-based lawyer who closely follows Katrina insurance litigation, said policyholders shouldn't expect a different result in the State Farm case even though its policy language is different from Nationwide's.

"The handwriting is on the wall,'' he said. "It would be shocking to me if the result was substantially different.''

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed

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Judge Throws Out All Federal Antitrust Charges Against Insurers, Brokers


Finding the charges lack any factual support, a federal judge has dismissed a big antitrust conspiracy case that was lodged against large commercial insurance brokers and insurers back in 2004 when bid rigging and account steering probes were in full sway.

In dismissing the antitrust complaint for the second time, Chief Judge Garrett E. Brown Jr. of the U.S. District Court for New Jersey said the plaintiffs had no proof that there was any sort of conspiracy among insurers and brokers to secretly allocate accounts, refrain from competing, or pay incentive bonuses on certain commercial accounts.

The plaintiffs alleged that the defendants had engaged in both a global conspiracy and so-called "hub and spoke" conspiracies in which brokers acted as hubs to coordinate illegal distribution of commercial insurance accounts among insurers (the spokes).

Defendants in the suit that have now been cleared of federal antitrust charges are some of the largest insurance companies and brokerages including American International Group, The Hartford, Fireman's, Liberty Mutual, American Re, Travelers, Chubb, Marsh, Willis, Aon and Hilb Rogal & Hobb.

The case was a consolidation of suits from around the country brought under federal antitrust statutes. It developed in the wake of investigations by state attorneys general including New York's Eliot Spitzer over alleged bid rigging, account steering and improper contingent commission payments.

These consolidated lawsuits took those charges to another level—claiming that they were part of a conspiracy among certain large insurers and insurance brokers and accusing the players of antitrust violations and racketeering.

This week, Brown put the antitrust conspiracy charges to rest in granting the defendants' motions to dismiss. He had also agreed with defendants in April but gave plaintiffs one last chance to amend their complaint.

But Brown found the amended complaint was even less convincing than the earlier one. In completely dismissing the conspiracy allegations, Brown wrote:

"While this Court previously held that the conspiracy allegations were faulty because they failed to show some sort of recognizable allocation of the market (a way for the insurers to understand what they were actually agreeing to divide), it appears that the allegations as presently drafted suffer from a more serious defect. This hub and spoke conspiracy is devoid of a factual basis for this Court to infer that an agreement existed among the competitors - in this case, the Insurer Defendants. Plaintiffs want this Court to view the specific facts regarding the 'incumbency protection racket' through their lens - which colors each demand from a broker to an insurer as being part of an agreement to restrain competition that already exists. However, when stepping back and viewing these facts in the aggregate, there is nothing in this record to suggest that there was any sort of express agreement among the insurers. While it is not necessary for the agreement to be explicit, the facts are simply too tenuous to intimate an implied agreement - a rim to this hub and spoke conspiracy. The brokers demanded certain behavior of the insurers, but that does not constitute a horizontal agreement among insurers to collude."

Brown found no evidence to support the charges of a global conspiracy among brokers to keep secret their contingent commissions and not tell clients about them. Plaintiffs had argued that the defendants' membership in the same trade group, the Council of Insurance Agents and Brokers, was proof. But for Brown, "membership in various trade groups and the sharing of information are insufficient to support an inference of actual concert of action."

He wrote that since plaintiffs failed to prove that the insurer defendants colluded among themselves in the broker-centered conspiracies, "it is improbable that they colluded to further this global agreement as well."

While this dismissal affects the antitrust complaint brought against the defendants, charges of violating federal racketeering laws are being judged separately and remain before the court.

Some insurers and brokers have settled similar antitrust complaints with officials in New York, Connecticut and other states, although they have not admitted doing anything illegal. Among those that have settled are insurance broker Arthur J. Gallagher & Co. and Zurich American Insurance Co.

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Monday, February 19, 2007

Mississippi Attorney General Wants to Compel Insurer to Stay in State

February 19, 2007

"Mississippi Attorney General Jim Hood said Friday he will seek legislation aimed at blocking State Farm Insurance Cos. from refusing to write new homeowners and commercial policies in the hurricane-battered state. State Farm, Mississippi's largest homeowner insurer, said Wednesday it has had enough of the 'untenable' legal and political climate in the state and is suspending writing new homeowners and commercial policies. The company said the suspension would begin Friday and continue until the business climate in the state is more palatable."