Commercial Flood Insurance Faces Changes

The destructive weather we have endured over the past two years has not only devastated property and lives, but also caused havoc in the insurance industry. Unfortunately, the National Flood Insurance Program (NFIP), with debt amounting to $17 billion prior to Hurricane Sandy, was particularly hard hit, and debt totaled more than $24 billion in mid-2013.

The NFIP currently is available to commercial property owners through large insurance companies. On October 1, 2013, NFIP rates increased; for commercial properties the increase was 25 percent per year until premiums reach the full actuarial cost.

Premium costs

As of October 1, 2013, a premium of $2,800 per year provides coverage of $500,000 for buildings and $500,000 for contents for companies qualifying for a preferred risk policy (in low or moderate-risk areas). For companies in high-risk areas, the standard rated policy is the only option available under the NFIP. Annual premiums start at $1,666 for $100,000 and $50,000 for building and contents respectively.

Separate coverage also can be obtained for buildings and contents. Premiums for standard-rated policies are based on such things as the age of the building, number of floors and occupancy, as well as the degree of flood risk. Replacement Cost Coverage is not available for commercial buildings or contents, and business interruption insurance is also not available through the NFIP

Extreme weather may continue

Statistical forecasts indicate that many cities are at risk if this extreme weather pattern continues, and experts are debating how to respond. Some cities are examining or revising flood plain maps to ensure they reflect current realities, and discussions are underway on measures to make urban spaces, in particular, more weather resistant.

With warnings such as these, businesses are naturally concerned about flood insurance. They should be: According to NFIP stats, 25 percent of businesses experiencing an event such as a flood closed up shop. From 2008 to 2012, the average flood claim was more than $75,000.

However, with the debt accumulated by the NFIP and dire warnings of sky-high premiums in the future, many are unsure about what to do and where to turn.

There is a first step: The Federal Emergency Management Agency (FEMA) has developed an online platform for those who believe they have been wrongly mapped as being in a Special Flood Hazard Area (SFHA). This designation means that SFHA businesses have a very high risk of future flooding; for them, an inadvertent mis-mapping can cost thousands of dollars in terms of higher premiums.

Letter of Map Change

The online Letter of Map Change constitutes a request to be re-designated. If granted, it will save on premiums and even offer some the option of not having to purchase flood insurance. If you believe you’ve been mis-mapped, it may be worth pursuing.

As noted, there is considerable debate in the insurance industry about the fate of NFIP. Changes can happen quickly. If you’re planning to purchase flood insurance, discuss it with your insurance professional, who will be aware of the most recent developments.

Be Safe: Sync Your Mobile Coverage to Today’s Technology

In the mobile universe, technology is changing faster than the speed of light. It seems that every few weeks the tech giants introduce something new, with features that will make life easier for small business.

However, many businesses are still operating at normal speed when it comes to the use and protection of their corporate devices. They haven’t implemented policies governing their employees’ use of personal devices, and many remain confused about data storage in the era of Big Data.

More to the point, their insurance protection often fails to keep up with the speed at which they are acquiring new technology. With hacking and other invasions of privacy so rampant, it’s vital you should have protection in place in your own mobile universe.

Here are three steps to take to ensure you have the proper coverage for your needs:

List all your mobile equipment

That includes cell phones, laptops and other mobile electronic devices. These days, many employees work through their own smartphones and laptops. This poses unique data protection problems; ensure your insurance professional is aware of the practice.

Don’t forget data storage

Cloud storage is a tremendous storage option for small businesses; but does the cloud offer total protection?

Consider your options

The technological boom of the past few years has transformed insurance coverage, and you need a knowledgeable source to sort through all the options. Your insurance professional can decode these options for you.

The Top 20 Most Expensive Cars to Insure

So you’ve bought that much-desired luxury vehicle. Congratulations. Now comes the second sticker shock: the increase in premiums you have to pay to insure your ride.

When purchasing a car – whether it’s new or resale – you should always consider your auto insurance premiums. Many factors determine rates: driving history; amount and type of usage; safety and crash tests ratings; theft statistics; where you live and work; and more.

But even if your vehicle has all the safety bells and whistles, you’ve never had a ticket, and you live in an insurance-friendly (safe) area, there’s no denying one of the most important rate factors of all: your car’s make and model.

The vehicle’s make and model play a very important role in the risk models insurers use to set your premiums. It’s simple logic: The more expensive the vehicle, the more insurers have to pay in the event of losses. So your luxury car will need more coverage, and you’ll pay more in premiums.

If you’re thinking of buying a car in the new year, when great deals abound, be sure to check this list first. So if you do opt for your dream car, at least you’ll expect the premium sticker shock.

Here, courtesy of consumer insurance website, is a list of the top 20 most expensive cars to insure in 2013 and their average premiums:

Mercedes-Benz CL600: $3,357,
Mercedes Benz CL65 AMG: $3,330,
Mercedes Benz S65 AMG: $3,221,
Mercedes-Benz SL65 AMG: $3,207,
Mercedes-Benz CL63 AMG: $3,184,
Mercedes-Benz S600: $3,158,
Mercedes-Benz SL63 AMG: $3,075,
Mercedes-Benz S63 AMG: $2,978,
Mercedes-Benz CL550 4Matic: $2,897,
Mercedes-Benz SL5508: $2,671,
Mercedes-Benz S5508: $2,640.

Porsche 911 Turbo: $2,958,
Porsche 911 Turbo S: $2,925,
Porsche Panamera Turbo: $2,912,
Porsche 911 Carrera 4S6: $2,642,
Porsche 911 Carrera S6: $2,626.

Jaguar XKR (convertible): $2,822,
Jaguar XKR (coupe): $2,756,
Jaguar XK8: $2,684.

BMW 650i8: $2,681.

Flood Insurance Can Protect You Now But Perhaps Not Forever

Did you know that homeowners insurance doesn’t cover ANY damages or losses attributed to floods, regardless of origin – hurricanes, torrential rains, or tornados. Many don’t realize this until it’s too late, and they’re absorbing losses themselves.

Experts expect our extreme weather patterns of the past two years to continue. So what can homeowners do?


Flood insurance is available through the National Flood Insurance Program (NFIP), a government program that provides contents and structural coverage through participating insurance companies.

Premiums depend on location and coverage options, providing either structure coverage, contents coverage, or both. Those living in low-to-medium risk areas qualify for Preferred Risk Policies (PRPs). As of October 1, 2013, PRP premiums start at $129 for properties without basements or enclosures.

What’s covered

Depending on your coverage, flood insurance will cover damage to personal belongings as well as structures. However, many types of damage aren’t covered, including those resulting from mold or moisture that could have been prevented, or damage to items outside insured structures, such as swimming pools, trees, and septic tanks.

Flood insurance is required for residents mapped as living in high-risk areas. But because of the increased claims resulting from extreme weather (consider the damage from Hurricane Sandy) re-mapping is underway, and this may change.

Check with your insurance professional for the most recent information.

Don’t Forget These Simple But Important ACA Changes

On January 1, all the provisions of the Patient Protection & Affordable Care Act (ACA) went into force. While many of us have been bombarded with the more complex ACA issues, not a lot of ink is being given to many simple, yet important, changes.

Here is a reminder of some key changes to help you get the most from your policy.

  • Emergency Services: Policies have to cover ER care. Previously pre-authorization from insurers was often needed for illnesses requiring an ER visit.
  • Preventive Care: Most policies now include free preventive care, like regular annual physicals. You’re now guaranteed at least one free annual wellness visit.
  • Prescription Drug Coverage: Your policy will now cover at least one drug in each category and medication class, or alternatively, must cover the same number per class as the benchmark plan. A benchmark plan is comparable to the average plan in your state. You’ll still be responsible for co-payments, but whatever you pay goes towards your annual out-of-pocket maximum.

Remember that, under the ACA, you are required to have a health care insurance plan or a penalty will be levied on your income tax return. In 2014, the fines are: $95 per adult and $47.50 per child.

If you are still confused, your insurance agent can help decipher the ACA for you, and if you haven’t already got a policy, you can obtain it through him or her.

NOTE: Changes to the ACA may have occurred after this newsletter was written. Call us for updated information.

Your Agent Can Help Decode Health Insurance Issues

As if anything to do with insurance isn’t hard enough to understand, things like healthcare billing certainly make it so. Policyholders commonly experience “balanced billing,” and getting one from a hospital ER, for example, might not be anything like you’d expect.

Common health insurance policy types – HMO and PPO plans – work within specific networks of healthcare providers to provide lower premiums. Unfortunately, even when visiting an in-network hospital, the doctor or surgeon who treated you may not be part of the same network.

After visiting a hospital, clinic, or any medical facility operating outside of your health insurance network, you may receive a bill for the difference owed after your health insurance has paid its share of the medical provider’s invoice.

For example, if you have a visit to a hospital emergency room (ER), you might receive a bill that looks a bit like this:

The hospital charges your insurance carrier $500 for an ER visit. The insurance pays $250. You don’t pay anything additional because the hospital is in a network contract with your insurance provider. You’re only responsible for co-insurance and co-pay amounts less your deductible.

A treating doctor also charges $500 for your ER visit. Insurance pays $250. Because the treating doctor hasn’t a contract with your insurance provider, you’re responsible for the additional $250.

To avoid “balanced billing”, ask your insurance agent which healthcare providers are in your policy’s provider network, so you can go to network providers wherever possible.

If you need health insurance, don’t feel as though you can buy coverage only through the government’s website or any of the third parties soliciting consumers. The insurance agent you have always worked with (and who is familiar with your individual situation) can answer your questions about healthcare reform and help you compare coverage. You also can purchase a plan through him or her.

Should You Donate Your Policy to Charity?

Most of us have life insurance policies to provide for our heirs when we die, but there may come a time when this is no longer a consideration…when, for example, your children are grown and providing for themselves. You could cancel your life insurance policy, or you might want to consider donating it to charity. There are two ways you can do this:

The charity becomes your beneficiary

One way to do this is to name your favorite charity as the beneficiary of your policy. The advantage: You retain access to any cash value remaining in the policy, and you can always change your mind about the beneficiary later. The downside: You don’t get an income-tax deduction.

Transfer ownership

If you actually transfer ownership of a life insurance policy to a charity, you’re eligible for a charitable deduction for the policy. This means you can deduct whichever is less: the policy’s fair market value, or the basis. Your basis comprises the premiums paid until the date of the transfer less dividends and withdrawals you have received, as well as any loans taken against the policy that haven’t been paid off.

If you elect to continue paying premiums to keep the policy in effect – something you’ll have to work out with the charity itself – you’ll get a deduction for those premiums as well. The deduction depends on how you pay your premiums (to the insurance company or to the charity), and it can vary from 30 percent to 50 percent of your adjusted gross income.

Additional factors

If arranged properly, this strategy will benefit you as well as your favorite charity. But it can get complex. For example, your other charitable donations may lower your deductions, as noted above. To ensure you maximize the benefits for you and the charity, it’s a good idea to consult your advisor before signing over your policy.