Posted by admin on January 17th, 2012
Sometimes you can look at a rural property and fall in love with it. There can be a beautiful stream burbling through a valley with a small stand of trees and a white picket fence – all the elements artists draw into the dream home. Although exurbs are not as picturesque, they can also be on the edge of “civilization” with real countryside just a few minutes away. Under normal, the realtor’s drum will be beating location, location, location. You will be encouraged to view on a summer’s day when everything is in apple-pie order. But before you buy into this version of the American Dream, you should do some serious investigating. You should start with a little history about the area. Does this stream suddenly produce flash floods as heavy rain washes down from the distant mountains? Do those valley sides offer a secure grounding for the trees or will mudslides bring the hillside down to your porch through the fence? Then, no matter where you live, there’s the really important question. Where is the local fire department located?
Have you noticed the big debates both at federal and state level over the deficit? Sorry, silly question. It’s an unavoidable issue and we’ve seen cuts made to all public services. For the most part, this has closed local parks, libraries and reduced the number of teachers in our schools, but left the law enforcement and fire departments untouched. Except out in the countryside, the volunteer departments now suffer loss of equipment and support for training. In the fringes of cities, smaller departments are being shut down and consolidated. This is bad news on the insurance front.
Every area of the country is given a rating based on the local fire department’s Insurance Services Organization rating. If your fire department gets a low rating, this means a low premium rate. So how does the rating system work? It all comes down to the efficiency of the service the department offers to the local community. Let’s say the department is centrally located and can get to all the homes within the immediate area within just a few minutes. This would be wonderful if it also had a crew on the premises, just waiting for the alarm bells to ring, and that crew could take out the latest in fire fighting technology. The fire fighters arrive and they are able to attach the hoses to local water mains with good pressure. This puts out the fire before it can do serious damage to the property. Read the rest of this entry »
Posted by admin on January 16th, 2012
You may want to believe insurers are hot competitors and never talk to each other. Except you would be wrong. There’s a steady flow of information into two central databases. The bigger and more important is called CLUE (Comprehensive Loss Underwriting Exchange) with the smaller competitor called A-PLUS (the Automated Property Loss Underwriting System run by Insurance Services Office Inc) which collect a broad range of information about you and how you relate to insurance companies. This is not just details of the claims you make. A range of factors are combined to produce an insurance score. This parallels the work done to create a credit score, and both scores are used by insurers to create a risk profile for you and set insurance rates. So, for example, both organizations record when you ask for clarification of your cover even though this does not result in a claim. It even records whether you are late in paying any of the premium installments. There’s also a positive effort made to collect public information about you, e.g. whether you are involved in litigation, have judgments against you, are subject to foreclosure orders, and so on. If any of this information is incorrect, it could mean you are only offered cover at high rates or you are refused cover. Because of this, many states have passed laws to give you basic rights. You will usually find your local rights set out on the site run by your state’s Insurance Commissioner.
The CLUE reports are sold by LexisNexis and provide information about all claims relating to your home or your vehicle. The key problem is that, if the score is very low, it could cause your home address to be blacklisted. While this might be an accurate assessment of your risk profile, it would do a significant injustice to anyone later buying your home. As an aside, all the information is stored for not less than five years so insurers use your history of claims to assess the risk you will file another.
The Gramm-Leach-Bliley Act is supposed to help you by requiring insurers to tell you when they share your information with anyone else, except CLUE reports are excluded from the Act. This brings us to the Fair Credit Reporting Act (FCRA) which does apply equally to credit and CLUE scoring. You have the right to ask LexisNexis and ISO Inc for one free copy of your insurance report every year. If you find any inaccuracies, you are entitled to have them corrected. If you feel the response of either LexisNexis or ISO Inc is unsatisfactory, you can insist a note is included in your file explaining your views. Unfortunately, you have no right to opt out of this sharing arrangement. Your insurers are entitled to continue sharing this information.
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