The Property Insurance Blog

Most, if not all, home and business insurances do not include flood losses in their policy coverage. The good news is, if your place is a member or participant in the National Flood Insurance Program (NFIP), your home or business insurance can be covered. Floods can happen anytime, anywhere, not just in places like near coasts, or along rivers. Even in the deserts, small or large sizes of tows and cities can be greatly affected by floods and flash floods. When there is flood in your area, you can not just be content on Federal Disaster Assistance only. Since a lot of people do not qualify for grants, you should consider a flood insurance which could come in handy when needed.

The 2008-2009 International Insurance Fact Book is now available from the Insurance Information Institute’s online store. The fact book contains statistics on the property insurance industries, as well as life insurance in 89 countries and provides the population, number of premiums, GDP and regulatory bodies of each country, as well as world rankings in terms of revenue and reinsurance. For more details of the insurance industry in the United States, the III store has the 2008 Insurance Fact Book, which details information across the states in handy almanac form, with updates on auto and home insurance claims and an added glossary.

The four higher financial security ratings merit the Security Circle icons, showing S&P’s confidence in the future performance of these companies.

An insurer with a BBB rating indicates Good financial security.

An A rating means the insurer has Strong financial security characteristics.

A rating of AA means that the insurer has Very Strong financial security characteristics.

The AAA rating, the highest issued by Standard & Poor’s, reflects the Extremely Strong financial security characteristics of the insurer.

A high rating does not always mean the the insurer will deliver the best service. It is still best to use the combinations of ratings and the experience of other users to decide which policies and companies to purchase.

Insure.com offers these explanations of insurer ratings to make it more accessible to the homeowner. A rating of NR means Not Rated, or there is no opinion given on the financial security of the insurer. A rating of R stands for Regulatory Supervision, at which time the regulators have a say what obligations must be paid over other obligations. We will go over the ratings in ascending order. In this post, we look at ratings considered vulnerable by Standard & Poor’s.

A CC rating signifies Extremely Weak financial security, suggesting that some financial commitments will probably not be attended to.

A CCC rating means the insurer has Very Weak financial security and may only be able to meet financial commitments depending on the business environment.

A rating of B indicates Weak financial security characteristics. If business conditions are not favorable, its ability to fulfill financial obligations will be hampered.

A rating of BB means the insurer has Marginal security characteristics. In case of adverse business conditions, there may be decreased ability to meet financial commitments.

In an industry that looks at the long-term, financial health is important. This is why Standard & Poor’s rates insurance companies. In this Internet age, making sound judgments is more important than ever, many now purchase insurance online. Note that S&P ratings are opinions, not specific to policies, and based only on information from other organizations. Ratings are not endorsements or guarantees.

Before we go into the letter grades, let us look at the ‘pi’ subscript. ‘Pi’ ratings are based on information available to the public and not as in-depth as ratings without it, which were analyzed through more comprehensive information from the management of the insurer.

Letter ratings may be followed by plus or minus signs to show their standing relative to others companies in that category.

How stable is your property insurance company? Financial strength is perhaps the top criterion when it comes to choosing an insurance company, as the ability to pay claims and obligations depends on this. As a property owner, it is your duty to find out an insurance company’s performance even before signing up for a policy. Nothing says reliability better than Standard & Poor’s financial strength ratings.  S&P issues reports and ratings on financial institutions, including thousands of insurance companies worldwide. Standard & Poor’s Security Circle Icons are your assurance that an insurer has voluntarily underwent S&P review and has one of the top four ratings. When buying insurance, look for the circle.

Condominium insurance has five coverage areas. Dwelling coverage refers to the interior structure, including paneling and wallpaper. Personal property insurance is separate. Add jewelry, antiques, collectibles and art to the coverage amount. As some items depreciate, the replacement value is higher than the actual cash value. Loss of use coverage is for expenses in case you need to move out of the condo because of damage. Personal liability coverage is for medical and legal costs for bodily injuries or property damage on others while on your property. Medical coverage is for injuries sustained on your property, regardless of your legal responsibility for the injury. No “Fault” Insurance is for natural disaster not covered by standard condominium insurance: earthquakes, floods, and hurricanes. There is rarely any insurance coverage for damages caused by pets, pests, termites, and rodents, or for war and nuclear accidents.

Insurance schemes for condo owners are different from regular homeowners. This is because the condominium association usually has insurance to cover common areas such as building exterior and walkways. Condo owners still have to protect themselves from losses and damage. The condo owners’ insurance policy includes insurance for their units. Before purchasing one, find out the association’s coverage, which parts of the building are not insured. Ask if you need flood insurance, what protection you have against liability claims, what medical expenses are covered if guests are accidentally injured on your premises, what additional insurance you need for valuables, and if additional living expenses can be reimbursed if the unit is not livable for any reason.

A survey conducted by Liberty Mutual and the Internation Association of Fire Fighters of revealed interesting results about fire safety in America. Although most respondents were concerned about home fires, many are negligent and lack awareness and education in such situations. It was found that 90 percent of Americans had a basic understanding of the importance of fire safety measures, 7 million have no smoke alarm, 37 million have no fire extinguisher, and 50 million Americans do not have a fire escape plan. Risky behaviors are also common: 26 percent reported leaving food that was cooking unattended, 16 percent said they have disabled the smoke alarm while cooking, 32 percent reported having holiday lights on when they were not home; and 12 percent said they have left candles burning unattended. Many other misconceptions were brought to light by the survey, showing the need for a better understanding of the causes of fire and what can be done to prevent it.

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The Texas Windstorm Insurance Association (TWIA) is a pool of property and casualty insurers in Texas. It was established in 1971, after Hurricane Celia forced insurance companies in the region to cease writing business. Its goal is to give Texans wind and hail coverage when it is unavailable in the marketplace and to pay claims in case of losses. It is therefore the provider of “last resort”, not a for-profit company or a state organization. TWIA runs agent workshops from April to June that are approved for continuing education. Learn more about the TWIA and visit their informative FAQs section on their website at www.twia.org.