State Farm Reverses Course, Stays In Florida

February 2, 2010

The Office of Insurance Regulation of the State of Florida released a statement about State Farm Insurance Company’s intent to leave the State of Florida. Commissioner Kevin McCarthy issued a consent order that ends the pending litigation between State Farm and the Insurance Commissioner’s office concerning State Farm’s plan to leave Florida’ property insurance market. State Farm will now continue writing business in Florida’s residential insurance market, and Citizens Property Insurance dodges a bullet that could have been fatal.

The Florida legislature established Citizens Property Insurance, the high risk pool, in 2002, in response to insurance companies that either went bankrupt, cancelled or pulled out of Florida because of repeated hurricanes. So, Citizens Property Insurance places the Florida taxpayers at risk for residential losses. Since 2002, storm after storm have struck Florida, nearly bankrupting Citizens. And Citizens is only one big storm away from ruin. So, when State Farm, the largest residential property insurer in Florida announced that they were leaving the state, the Insurance Commissioner’s office panicked.

This allowed State Farm to figuratively bend the Commissioner over the couch and have its way with him. Prior to State Farm’s announcement that they were leaving Florida, the company requested a rate increase of over 65% which was denied by the Commissioner. But rather than wave goodbye to Florida’s largest insurer, the Commissioner has granted the smaller…yet generous…rate increase of 14.8%. And, it is allowing State Farm to get rid of 125,000 policies that are arguably the highest risk policies they have on the books.

So, not only does State Farm get a rate increase on all policies, but it gets to keep its most profitable business and shove the riskier business off onto the taxpayers of the State of Florida. And for Citizens, 125,000 risky policies is better than 860,000.

You’ve got to admire that kind of moxy. State Farm, being the largest insurer in Florida, took full advantage of their market position and finally showed the State of Florida who is the boss. The regulators and the Florida legislature had little choice and no options but to give in to State Farm’s demands. The press release issued by the Commissioner’s office was a pitiful attempt to save face and spin the story to look like the Commish’s office was protecting Florida’s property owners.

Don’t you wonder if the terms of the consent order was what State Farm wanted all along?


Insurance Fraud: The Dumb Criminal Chronicles 1

December 10, 2009

One of the greatest challenges insurance companies face is the ferreting out of insurance fraud. Wherever there is a chance that someone can get paid for submitting a fraudulent claim, there are also stupid people who are willing to give it a try.

Here are some recent examples:

1. Arson (I like this story because of the restaurant’s name.)

JACKSONVILLE BEACH, FL: Two men were arrested and charged with insurance fraud after a 2008 fire at Wakey, Wakey Eggs & Bakey.

The fire was set in the kitchen after the restaurant closed on May 5, 2008, and caused over $200,000 in damages.

One of the owners, Victor H. Jara, was arrested and charged with arson and filing false insurance claims. Matthew Thayer, a contractor, was also arrested on the same charge.

The building’s owners had just evicted the restaurant owners for defaulting on the rent.

2. Dumb Insurance Adjusters…there are a bunch of them.

BALTIMORE, MARYLAND: A Maryland woman pleaded guilty to writing company checks to herself and depositing the money into her own checking accounts while she was an insurance claims adjuster.

Shironda Jones pleaded guilty to one count of felony theft over $500. She was sentenced and ordered to pay back over $16,000 she had stolen from Nationwide Insurance Company between September 2006 and September 2007.

3. Hometown Insurance Fraud…I missed out on all the fun.

KENT COUNTY, MICHIGAN: Grand Rapids, Michigan is known as the Furniture City, and is getting a reputation as a hub for medical research. But now it’s become the Michigan Mecca for insurance fraud.

Three of the top Five insurance fraud cases in Michigan in 2009 were committed in Kent County.

The top case was Dr. Robert Stokes, a dermatologist who bilked Medicare and other health insurers for over $2 million. He is in prison serving a 10-year sentence for double billing and charge for work he did not perform.

Stokes’ Tudor mansion on Reeds Lake, which he tried to sell for $7.7 million, was recently auctioned off by the bank for $1.75 million.

Next case involved James Westra, age 80, who paid a former employee to torch his business so he could collect over $300,000.

Third is Isaac Chandler, of Alpine Township, who was sentenced in Augustto at least six years in prison for selling $40 counterfeit insurance policies to almost 500 people.

Insurance fraud is serious business, since claims paid on fraudulent claims cost ALL of us higher premiums. It’s no different than shoplifting at a retailer. Stores simply add the cost of their “shrinkage” to the cost of the goods you and I pay for.

Report any suspected insurance fraud to the police. And know that most of the time, criminals get caught.


Best P&C Insurance Companies: How Do You Find The Best?

October 14, 2009

In 2008, The Department of Insurance of the State of New York released a report showing the 40 P&C insurance companies that had the most complaints. We did an article about this previously. We showed the ten worst companies, the ones that got the most complaints. But we did not feature the ones that got the least number of complaints in New York, a tough insurance market.

Here is the list of New York’s best P&C insurance companies as determined by the least number of complaints, higher number of complaints as you go down the list:

1. Long Island Insurance
2. Infinity Property & Casualty
3. Interboro Mutual
4. Tri-State Consumer Ins. Group
5. American International Group (AIG)
6. Safeco Insurance Group
7. Countrywide Insurance
8. White Mountains Group, OneBeacon, Esurance, Auto One Ins.
9. State Wide Insurance
10. Hannover RE Group, Clarendon National (no longer writing business)

You may find that some of these companies are only local or regional and that you cannot do business with them where you live. But notice that AIG, Safeco, OneBeacon and Esurance are national companies that got fewer complaints.

It’s not as easy to list a Top Ten Best P&C Insurance companies for America. We would have to contact all 50 state Departments of Insurance and find out which insurers had the least complaints. The National Association of Insurance Commissioners presently does not have any such report. In addition, complaints are not the only criteria that should be used to evaluate an insurance company.

Think about this statement, my friends.

The only thing that truly matters about your insurance is what happens when you submit a claim. It doesn’t matter how good your agent is…or if the company sends you a calendar every year…or buys you dinner. It really doesn’t matter if you pay a low premium or a higher premium. Claims handling is EVERYTHING!!

    Claims are about KEEPING PROMISES.

When the insurance companies don’t keep their promises, the complaints pile up!

Lowest premiums are not the only criterion you should use, either. Shopping for insurance is confusing and complicated. Determining if your quotes are “apples and apples” comparisons takes strict attention to detail.

You may need the help of a dedicated, experienced agent to determine your insurance needs and buy the right policy. Still, my recommendation is to shop widely for your insurance needs. Get quotes from captive agents (who only write for one company) and independent agents (who write for multiple companies).

Getting quotes on the internet makes shopping for insurance very easy these days. But look for an insurance quote service that can give you competitive quotes PLUS strategies on submitting insurance claims that will help you collect thousands of dollars more in your claim settlements.

So, which insurance company should you do business with?

1. Choose a company that has an A+ or A rating from the insurance rating services like A.M. Best.
2. Get multiple insurance quotes at least every two years, then choose the company whose policies give you the most coverage for the least money. Don’t worry about company loyalty. The companies don’t care and neither should you.

If you are one of the unfortunate people who experience a loss of any kind, you’ll need to know how to handle your insurance claim so that you maximize your recovery. You will need to know how to take control of your insurance claim, and add hundreds or even thousands more dollars to your claim settlement. For more information, check out:

www.ClaimSecrets.com

For the only online insurance quote service that provides you competitive quotes and claims strategies, check out:

www.InsuranceQuoteHQ.com

You can win the insurance game if you have the right information. So go and win!


Life Insurance and Wall Street – The Latest Scam

September 12, 2009

You might have heard of Viatical Life Insurance Settlements. The viatical settlement is when a life insurance policy owner sells the policy to another party. The buyer discounts from the face amount of the policy but usually pays an amount in excess of the cash value of the policy. This provides the seller an immediate cash settlement that’s higher than he would have gotten from the insurance company. The buyer continues to pay the premium until the death of the seller. Then, the buyer collects the face amount of the policy.

Most of the time, viatical settlements are done by people with shorter life expectancies, such as terminally ill patients. This settlement procedure is a practical way to generate cash that may be needed prior to the death of the policyowner, such as medical bills, health insurance premiums, or pre-burial plans….even just living expenses.

Well, the Wall Street Banksters (gangsters?) has figured out a way to turn life insurance policies into a security that they can sell. They are putting these cash value life insurance policies into portfolios just like they did with mortgages. They are selling these new securities around the world to investors. And not just private investors, but institutional investors like mutual funds, pension funds and such. Seems that the big institutional investors didn’t learn ANYTHING from the collapse of the sub-prime mortgage securities market. They are willingly snapping up these new securities as fast as Wall Street can produce them.

About the only thing that could negatively affect these securities is an unexpected lengthening of life expectancy. So, make sure you do what you can to die early!

Remember that the insurance companies are complicit in these new securities. Don’t be surprised if they are actually buying them. It would give them a way to get some of their death benefit money back. Spreading the risk, so to speak.

Some people never learn.


Verdict on Aftermarket Parts Costs Insurance Company $17 Million

August 29, 2009

American Family Mutual Insurance Company was ordered to pay $17 million to settle part of a class action lawsuit over aftermarket parts in Missouri.

A jury in Jackson County, Missouri returned a decision that American Family had wrongly paid automobile damage claims based upon the use of aftermarket replacement parts.

Aftermarket auto parts are not held to the same testing and safety requirements as Original Equipment Manufacturer (OEM) parts.

Consequently, they may fit on a car as a replacement part, but the use of an aftermarket part does not constitute repairing the car to the pre-loss condition. Insurers love aftermarket parts because they are considerably cheaper than OEM parts.

The jury verdict affects 315,000 Missouri policyholders who filed claims between May 1990 and December 2004.

Ted Pintar is one of the Plaintiff attorneys. “It (the verdict) sends a clear statement to insurance companies who continue to force inferior aftermarket parts on insureds as part of their claims practices.”

A spokesman for American Family Mutual Insurance Company said that the company would appeal the verdict.

Friends, don’t think for a minute that the insurance companies will just roll over and accept this verdict as a standard for the nation. Every state has its own Department of Insurance, and they will continue to conduct business as usual on a daily basis. So, if you have a car wreck, you must still insist IN WRITING that your vehicle be repaired with OEM parts.

First and foremost, your car will not be as safe as it was before the accident if aftermarket parts are used.

Second, there is the matter of Diminished Value. Every car loses value once it has been in a collision and has to be repaired. A vehicle repaired with OEM parts will lose less value than one repaired with aftermarket parts.

You must fight for your own safety and the value of your car. The insurance company does not care about either.

Fight and WIN!


Contractors Alert: Your Liability Carrier May Start Playing Rough

August 6, 2009

If you are a General Contractor (GC), you most assuredly carry Comprehensive General Liability insurance for your business. If you’ve spent any time reading your policy (fat chance), you may remember that the terms and conditions of the policy require you to protect yourself and your insurer.

Specifically, when you hire sub-contractors, you are supposed to require that the “sub” execute a Hold Harmless agreement as part of the contract, in which the sub agrees to protect the general contractor from liability for acts of which the sub is found legally liable. Further, the sub is supposed to name the general contactor as an Additional Named Insured, which provides a legal defense to the GC. At that point, the GC’s policy becomes excess over the sub’s coverage.

I used to be a General Contractor, and I know GCs pretty well. They, being a somewhat independent bunch, frequently do business with subs on little more than a handshake or a phone call. These subs are people they’ve used repeatedly, and a high level of trust is in place. The idea of getting all that contract paperwork executed before the first hammer is lifted or spade turned is just a pain in the backside. So, it regularly gets ignored.

Unfortunately for GCs, the insurance companies have been taking it in the wallet as they have absorbed liability for the GCs when they fail to get that Hold Harmless in place. So, the risk management efforts that the GCs are supposed to do aren’t getting done. And that has the affect of transferring the risk to the insurance companies.

They get to pay when the GC’s contract fails to contain a Hold Harmless Clause.

They get to pay when the GC doesn’t require his subs to maintain their own insurance.

They get to pay when the GC doesn’t get himself listed as an Additional Named Insured on the sub’s policy.

So, the insurance companies have begun to issue policy endorsements that deny coverage when there is a loss due to the sub’s operations and the GC did not get the Hold Harmless Clause into his contract and proof that the sub named the GC as an Additional Insured. The insurers are figuring that the only way to get the attention of the General Contractors is to put some of the GCs’ assets on the table.

On August 4, 2009, the California Court of Appeals issued the ruling in North American Capacity Ins. Co. v. Claremont Liability Insurance Company. The ruling upheld this Contractors Warranty Endorsement, and stated that the insurance company could take an excess position even if the subcontractor had no insurance, simply because it was their duty to have insurance. Therefore, the endorsement and coverage could proceed AS THOUGH the subcontractor had the coverage in place.

To quote the ruling:

“We find the “clear and explicit” meaning of the contractors warranty endorsements, as used in their “ordinary and popular sense” by a layperson establishes a precondition of coverage as to work done by subcontractors for whom (the GC) failed to secure both a written hold harmless agreement and a certificate of insurance. The trial court therefore did not err in finding the contractors warranty endorsement enforceable under the facts of this case.”

Now that the insurance companies have a favorable court decision in their back pockets, you should expect your insurance carrier to play for keeps. A potential liability claim denial will bring a new discipline to the business life of the General Contractor.


Automobile Accidents: Four Tips To Avoid Car Versus 18-Wheeler Accidents

June 28, 2009

Automobile Accidents between cars and big trucks favor the trucks. It’s just a matter of physics, really. Cars weigh 2-3 tons. Tractor-trailers have a weight limit of 80,000 pounds, which is 40 tons. An 80,000 pound truck, traveling at 55 miles per hour, generates 1 million foot-pounds of forward energy. Getting hit by a moving object that weighs 20 times as much as your vehicle is a recipe for death and destruction.

Here are four tips on avoiding accidents involving your vehicle and “Big Rigs:”

1. When you’re driving near a big rig, make sure that you can see his mirrors. If you can see his mirrors, then you know that he can also see you. Big rigs have enormous blind zones. If your car is in his blind zone, the trucker doesn’t know you are there.

2. Don’t stay next to a big rig while you drive. Either get behind him or move forward of him. Give him the chance to see you, and you’ll lower your chance of getting hit by his vehicle.

3. Trucks need long distances to stop. If you are in traffic, do not merge into the lane directly in front of a big rig unless you are going faster than the trucker. I’ve handled many accidents…some which were fatalities…in which a small car darted into the lane in front of a big rig and then slowed down suddenly. The trucker didn’t have any chance to slow down and avoid striking the vehicle directly in front of him.

4. Turn on your headlights while driving. “Running Lights,” as they are called, increase your visibility. Tests done on cars with running lights by the Society of Automotive Engineers showed a 38% reduction in collisions. Test results by Avis Rent-a-Car showed a 64% reduction in car damages, and a 69% decrease in repair costs for cars using running lights.

If you’ll follow these four tips, you’ll drastically lower the chance that you will have a traffic accident involving a big rig.

Drive Defensively! Watch out for the other guy!

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