Category: Personal Insurance

Birth Of Force-Placed Insurance | Brooklyn Covered

Of course, the jackals were waiting in the bush. As soon the distressed fell into default, they pounced. Now the letters and calls offerd relief in the form of a quick sale. In many of theses cases, what the house sold for was barely enough to cover the outstanding mortgage. So, you had a home you’ve lived in for 30 or 40 years. No mortgage. Now you have nothing and nowhere to live.

The Birthplace of Force-Placed Insurance

While those who participated in the scam known as sub-prime lending deserve whatever punishment they receive, let’s not forget where they learned their lessons. And how force-placed insurance grew to become the serious issue it is today.

An Indication of Force-Placed Insurance

PropertyShark.com provides information about housing around the region. PropertyShark .com just  published a map showing all the distressed properties in New York City during 2011. You can see the map here: http://www.propertyshark.com/mason/ny/New-York-City/Maps?map=nyc2&x=0.5632&y=0.6809333333333333&zoom=2&basemap=lispendens&star=1&tab=themes&ll=40.6289391996291,-73.9243806440218

Now, as you look at the areas in Brooklyn and Queens, a disturbing trend becomes evident. In communities of color there are more of those nasty little dots than anywhere else on the map. How did this happen?

Well, blame the first phase of the problem on those dirt bags who engaged in the worse form of predatory lending known to man: The predation of elderly and unsophisticated homeowners.

They mailed thousand of letters each week, and employed telemarketers whose only mission was calling these unsuspecting homeowners and convincing them to meet with a consultant. They told these vulnerable folk about how their homes had money (equity) just sitting there doing nothing. They could use this money or repairs, a trip home, and many other reasons. They never told them about reverse mortgages. No, you see there was little profit in legitimate financial instruments like reverse mortgages. Heck, sometimes, they didn’t even say a mortgage was involved.

Then, when they met with their unsuspecting victims, they’d tell them how they didn’t have to take a dime out of their pockets for anything. Little did the public know everything was coming out of their home equity. Many didn’t know  how their loan applications were falsified to reflect fraudulent rental, pension and employment incomes.  Corrupt appraisers  valued homes for much more than they were worth, so lenders could meet the necessary “loan-to-value” numbers.

So, the homeowners applied for $25, 000 and more. They’d go to the closing table thinking about what they’d do with the money, only to walk away with $5,000 or $7,000. What happened to the rest of the money, you ask? Well, that went for attorney fees, application fees, and any other fees you can think of. Fees which, were the mortgage not predatory in nature, would average about 6% of the total cost of the loan. Money which shouldn’t come out of their equity, but from liquid cash.

Once the deception was discovered, some would revolt and demand, via the right of the three-day rescission rule, the cancellation of the loan and return of all of their funds.

Too few people did this.

Most, convinced this was the way business was done, struggled to pay loans with high interest rates, at a time of life when they should enjoy living in a home without outstanding debt. And yes, force-placed homeowners insurance helped many of these same people fall deeper into the pit. Many of these people wound up losing their homes, because their Social Security and pension checks couldn’t handle the weight of their new monthly obligation.

Of course, the jackals were waiting in the bush. As soon the distressed house fell into default, they pounced. Now the letters and calls offered relief in the form of a quick sale. In many of theses cases, what the house sold for was barely enough to cover the outstanding mortgage. So, you had a home you’ve lived in for 30 or 40 years. No mortgage. Now you have nothing and nowhere to live.

I’ll be returning to the subject of force-placed homeowners insurance next week. I just wanted to let everyone know this resource was available.

If you, a family member, or a close friend are either in, or facing default on your mortgage obligations, please call me at 718-783-2722. There are organizations like Bridge Street Development Corp. ,  (bsdcorp.org), and Neighborhood Housing Services (nhsnyc.org), ready to provide counsel and guidance to homeowners in need. If you’re paying for force-placed insurance, call me. Let’s work together to save you thousands of dollars you can use to bring and keep your mortgage obligations current.

Bundle Insurance Coverages, Or Else | Brooklyn Covered

According to a recent article in The Insurance Journal, a major insurance company announced plans to drop their North Carolina homeowers insurance clients who didn’t bundle, or combine, their automobile insurance policy with the same company. As many as 45,000 homeowners insurance customers were due to be non-renewed unless they bundled insurance coverages for their home and automobile insurance from this carrier by December 15, 2011.

Bundle Insurance Coverages, Or Else

According to a recent article in The Insurance Journal, a major insurance company announced plans to drop their North Carolina homeowners insurance clients who didn’t bundle, or combine, their automobile insurance policy with the same company. As many as 45,000 homeowners insurance customers were due to be non-renewed unless they bundled insurance coverages for their home and automobile insurance from this carrier by December 15, 2011.

The company doesn’t plan to simply let these former policyholders fend for themselves. They’ve already made arrangements with other companies to provide these former policyholders with coverage.

Let’s look at the positives of bundling insurance coverages.

  1. Bundling insurance coverages saves money. When you place one or more policies with the same company, you can qualify for what’s known as a multi-policy discount. This discount, depending on the company, can range from 5% to 15% on each policy you have with the same company.
  2. Bundling makes it easier to keep up with all your coverages. Now you won’t have to call two (2) or more agent or servicing companies to stay on top of your insurance. 
  3. Purchasing Umbrella Insurance. Adding an Umbrella Liability policy to your insurance portfolio is a cost-effective method of protecting your property from loss in case of a liability claim against you. To qualify to buy this coverage, many companies now require you to have both your auto and homeowners coverage with them. One reason for this is to guarantee the insured continually carries certain minimum personal liability amounts on each policy. And, the company knows immediately if either policy lapses, which could invalidate the umbrella policy coverage.

While there are positives, this “Forced-Bundling,” (sounds a bit like force-placed homeowners insurance doesn’t it?) does raise several critical questions. 

  1. What is their financial relationship with these other companies? Are they truly separate entities, or will they be some type of wholly owned subsidiary?
  2. How will this company compensate its agents for the loss of income they stand to face? Imagine an agent losing 50 – 250 clients in one fell swoop. This will create a huge loss of income during difficult economic times.
  3. Will they allow their agents to become licensed agents for these other insurance companies, or will that ability only be offered to  preferred agencies? Even if they allow all of their agents to seek agency contracts with the new companies, will those companies only offer agency contracts to the best and/or largest agencies?
  4. How will these same agents deal with the loss of community confidence and good will? People tend not to like being dictated to, and the easiest person to whom they can voice their displeasure is their local agent. And, they’ll vote with their feet, wallets and pocketbooks.
  5. How does the underwriting and claims handling ability of the  new companies compare with that of the original company?
  6. What if you’re paying less for your automobile insurance at another company, even while taking the multi-policy discount into effect? Why should you be forced to pay more than what you’re paying now with another carrier?
  7. Let’s suppose you have terrible credit and/or a lousy driving record. You may not even meet the basic underwriting criteria for any of this company’s auto insurance companies. What will happen then?

This situation will anger many, and that’s understandable. One of my clients claimed it was akin to being held up at gunpoint in a dark alley with the criminal telling you, “You’d better give me some money or I’m going to shoot you.”

And just your luck, you’re wearing your jogging shorts.

The ones without the pockets.

 I’ll let you know how this works out for all parties concerned.

 

Force-Placed Home Insurance | Brooklyn Covered

When you signed your mortgage commitment, one of the requirements you agreed to do was maintain home insurance on your home. This homeowners insurance policy would contain a certain amount of Coverage A – Dwelling Coverage, as well as a mortgagee clause, naming the bank and your loan number.

What Is Force-Placed Home Insurance?

Force-placed home insurance is insurance your mortgage bank places on your home when you fail to maintain contractually required home insurance coverage.

Why Do I Need Home Insurance?

When you signed your mortgage commitment, one of the requirements you agreed to do was maintain home insurance on your home. This homeowners insurance policy would contain a certain amount of Coverage A – Dwelling Coverage, as well as a mortgagee clause, naming the bank and your loan number.

When you think about it, home insurance protects the homeowner against the loss of what is once again, the single largest purchase many families will ever make. Imagine a fire reducing your home to cinders and burned bricks. Without home insurance containing coverages in the proper amounts, you’d probably suffer a total loss of all you’d worked so hard to acquire.

So How Does The Bank Figure Into All Of This?

When a bank makes a home mortgage loan this creates the need for the bank to protect its interest in the collateral supporting the loan, otherwise known as the home. So the bank is fully within its right to require you keep certain coverage on the home.

What Creates The Need For The Force-Placed Home Insurance?

Your mortgage is composed of four (4) basic components:

  1. Principal, or the amount which amortizes or reduces the amount you owe the bank.
  2. Interest, or the cost of the money you’re borrowing. (What, you thought you get a $500,000 loan for free?)
  3. Taxes, or what your local municipality charges you for your home to sit in or on dirt. This amount is usually based on the number of stories, square footage and lot size of the house. That’s right, you’re paying more just to have the huge burned lawn.
  4. Insurance, which is my favorite part.

The portion of the mortgage for the taxes and homeowners insurance are escrowed monthly. That means a part of the quarterly or annual bills for each are collected and held by the bank each month, presumably to make payments when due. The key point to remember is the escrow system works well when your monthly mortgage payments are made on time each and every month. Fall behind by even one payment and you ‘ve developed a shortage in your escrow account.

Now here’s the kicker. Let’s say you bought a home during the period I will always call “The Time of Home Purchase Madness.” First, you paid too much for the house. Second, you someone qualified for a mortgage by being able to fog a mirror. No documentation, lousy credit score, and no down payment? Heck, certain mortgage brokers would knock their mommas out of the way to get you a loan.

Let’s move forward to what I call the “What The Hell Were We Thinking?” or, “What Do We Do Now?” time. That’s when too many people realized they should’ve stayed in their rent-stabilized apartments, kept the affordable home they already had, or kept sleeping on Mom’s couch. Suddenly, you miss first one mortgage payment, then another. Now, banks will move heaven and earth to make sure  the real estate taxes on your home are always paid on time. The last thing they want is to lose a property they’re holding a note on to someone who purchases a tax lien.

Banks Do The Same Thing For The Home Insurance, Right?

Wrong.

Let’s imagine your escrow is now short by two to four months payments. Home insurance bills are usually sent to the bank or mortgage servicing company 30 days before the due date.

In the worse case scenario, you have an escrow shortage when the bill from your homeowners insurance company arrives.

Guess what? Since you failed to keep up your end of the bargain, the bank is not required to go out of pocket to pay your homeowners insurance premium . The policy usually lapses. And then guess what happens? Because your world is collapsing around you, and each day brings more despair, you stop opening the mail or answering the telephone. It’s only months later when you learn your homeowners insurance policy lapsed and the bank placed another, force-placed policy on your home. And what gives you a clue? The sudden increase in the negative balance of your escrow account to the tune of $3000 to $8000.

Why so much? Because they can. It’s stupid, really. Instead of just paying a premium of say, $1800, the bank instead buys a policy for you which will cost at least three times as much. With less coverage. See, that’s the real zinger: Every force-placed policy I’ve ever seen covers only one thing – the outstanding mortgage balance.

There’s no coverage for your personal belongings in case of fire or theft. No coverage for liability should someone injure themselves on your property. No coverage to help you with the added expenses of renting an apartment while your home is being rebuilt.

Not even the full replacement cost of your home.

Just the outstanding mortgage balance.

And you’re paying at least three times as much for the privilege to get less coverage.

In my next post about force-placed home insurance, I’ll talk about how it will continue to drag down the economy, how to avoid having it happen to you, and what to do if it does happens to you. Also, I’ll include a link to a radio interview I did back in 2009, about the force-placed home insurance problem.

Eustace L. Greaves, Jr., LUTCF is a Brooklyn-based independent insurance agent and broker. Contact him today to make an appointment to review your home, life, disability, flood, renters, condo, coop, and auto insurance program. You can also reach him by email at [email protected]. And please take a moment to subscribe to BrooklynCovered.com.

Handheld Electronic Device Law Changes | Brooklyn Covered

While illegal though, the driver had to be stopped for another traffic violation in order to receive a ticket for using the handheld device. So, if you’re like many drivers I’d see on Brooklyn’s Third Avenue, heading to the Verrazano Bridge during the afternoon rush while texting, talking, checking email, and in one case playing Angry Bird, you could get away with murder. Probably the murder of some poor pedestrian, or another driver, who like me would have the blow the heck of their horn to get “Birdmans” attention before he ran into me

Stop wasting your time and money playing Powerball and Mega Millions. Just give me a digital camera so I can take pictures of drivers breaking the new Handheld Electronic Devices law. Then, I’ll upload the photographic evidence of their unlawful activity to the New York State Department of Motor Vehicles. They can send me a check for $1,000.00 for each law-breaker. Let’s see, ten (10) each day, at $1,000.00 each, that’s $10,000.00 each day, times 20 working days each month…

…Like I said, who needs Powerball of Mega? This is a sure thing.

Wait A Minute. Another New Law?

On July 12, 2011, New York State Governor Andrew M. Cuomo signed a new law about a drivers use of handheld electronic devices while operating a moving motor vehicle in New York State. Specifically, what once was a secondary traffic offense is now a primary offense.

What’s The Difference Between  Primary And Secondary Offenses?

Under the old law, it was illegal for a driver to use a cell phone, IPad, or other handheld electronic device for texting or talking while operating a motor vehicle, i.e., while the vehicle was in motion.

Though illegal, the driver had to be stopped for another primary traffic violation to be ticketed for using the handheld device. So, if you’re like the many drivers I see on Brooklyn’s Third Avenue, heading to the Verrazano Bridge during the afternoon rush who are engaged in texting, talking, checking email, and in one case playing Angry Bird, you could get away with murder. Probably the murder of some poor pedestrian, or another driver, who like me would blow the heck of their horn to get “Birdmans” attention before he ran into me.

The police were required to pull you over for failing to signal a lane change, speeding, or some other primary violation to smack you with a ticket for use of the handheld electronic device. So, in addition to the points and fine for the primary offense, law enforcement would also give you a ticket garnering you two (2) points and  a fine of $150.

How The Law Changed

As of July 12, 2011, law enforcement no longer needs any other reason to pull you over for violating what is now a primary offense. This means getting a ticket for three (3) points, and a fine of $150.00.

What Constitutes Illegal Activity?

Illegal activity includes holding an electronic device and:

  • Composing, sending, reading, accessing, browsing, transmitting, saving, or retrieving electronic data such as e-mail, text messages, or webpages;
  • Viewing, taking, or transmitting images, and;
  • Playing games.
How You Can Avoid A Ticket

As long as the device is attached to a surface inside your car, or is a GPS device attached to the inside of your car, you’re okay. You can also use a bluetooth earpiece if you absolutely must talk all the way home.

If you’re trying to communicate with law enforcement, the fire department, or medical personnel during an emergency, you won’t face a fine.

Who’s Exempt  From The Law?

Police officers, fire fighters or emergency vehicle drivers while they are performing their duties.

How The New Law Really Affects You

  • You’ll receive three points on your license, meaning your automobile insurance will  increase at renewal. If your insurance company decides to renew your policy. Your company may forgive an accident, but not one caused by your unlawful operation of a moving vehicle.
  • Based on the number of points already on your license, you could be required to pay annual assessments, every year for three (3) years.
  • Should you exceed the number of points New York State needs to suspend your driver’s license, you could find yourself taking the train and/or bus. Then you can talk and text all you want.

According to The National Highway Traffic Safety Administration,  5,500 people were killed and 450,000 people were injured in distracted driving crashes in the year 2009.1 Also, you’re 23 times more likely to crash if you text while driving.1 

So, stop the distracted driving. Chances are, you’ll live longer, pay less for your insurance, and only take the train and bus when you want to.

As for me, I guess it’s time to be “In it to win it.”

1.   http://distraction.gov , “Driving Safety.”

Save Money on Homeowners Insurance|Brooklyn Covered

The most important part of purchasing homeowners insurance is not the price of the policy, it’s the replacement / reconstruction cost estimate. This becomes your policys Coverage A or Dwelling Coverage amount. Without the proper Dwelling Coverage, you put yourself in the position of having to self-fund part of the reconstruction cost of a damaged home at 140% on the dollar. Why 140%?…

How Do I Save Money On My Homeowners Insurance Policy?

A homeowners insurance policy is just worthless sheets of paper unless it gives you the dollars and coverages you’ll need to rebuild your home and your life when a covered loss occurs. 

What’s Most Important When Buying Homeowners Insurance?

The most important part of purchasing homeowners insurance is not the policy premium. What matters most is determining the replacement, or reconstruction cost estimate. This becomes your policys Coverage A or Dwelling Coverage amount. This is the amount of coverage your policy will generate for covered causes of loss.

 Without the proper Coverage A – Dwelling Coverage, you put yourself in the position of having to self-fund part of the reconstruction cost of a damaged home at 140% on the dollar. Why 140%? Well you have to pay taxes on your  gross income before you realize the net income. Also, all the other coverages in Section I of the Homeowners policy represent a percentage of the Coverage A – Dwelling Coverage amount. So a competent replacement estimate is the essential component necessary for building a sound Homeowners Insurance policy.

So, Any Insurance Broker Or Agent Will Do?

No, you should seek to work with an insurance professional who will invest the time necessary for gathering information about you and either your future or existing home. This is key. I have clients who chose me because after talking to me during the initial phone call, they had to go back and find out more information about their home than they thought necessary. Information, in many cases, other so-called professionals either didn’t take the time to ask, or simply didn’t care.  In most cases, you’ll prefer working with a “Mr. Nosey” than someone who simply wants to know what you paid for the house, or how much coverage you now carry. Another way to find a trusted insurance representative is by contacting local housing organizations. They work with many homeowners and are good sources of information and referrals for all the professionals you’ll need as a homeowner. 

Once the information is gathered, a true insurance professional will use either a computer or paper-based system to determine your future or existing homes replacement cost. The  brick for brick, nail for nail, pipe for pipe, wire for wire, and board for board amount necessary to put your home back together again. Then you’ll truly have a sense of how much insurance is really necessary to properly cover your home.

Here’s a small sample of the types of information you should be prepared to provide your insurance representative:

  • The square footage measured using the outside walls.
  • The types of flooring materials used in the house and the percentage of each.
  • Whether the walls are plaster, drywall, or some other material and the percentage of each.
  • The number of kitchens and bathrooms, and whether they are builders grade, or have some form of customization.
  • What kind of roofing material you use.
  • What type of heating system you use.
  • Maintenance and upgrade information about your roof, plumbing, heating, and electrical systems. A good insurance representative will want to know maintenance or upgrade dates, and whether a licensed professional performed the work. (Note: few, if any insurance companies will insure any home which doesn’t have circuit breakers. Fuses will result in the automatic non-renewal or rejection of your policy.)
  • Whether you have any pets, especially any of the no-no breeds, (Dobermans, Akitas, Pit Bulls and Wolf Hybrids to name just a few). Also, if any of your pets have a bite history, even that lovable little Yorkie which loves to nip strangers, you might want to seek out a company which is more forgiving about that type of risk exposure.

When It Comes To The Basic Coverages, Are Any Companies Really Cheaper? 

When you compare most Homeowners Insurance policies using an apples-to-apples comparison, (Same dwelling amount, same policy form, same state), you’ll find most companies homeowners insurance premiums for policies with the same coverages are usually within $50.00 to $100.00 of each other. So here are a few tips to really impact the premium amount you’ll pay for your Homeowners Insurance coverage:

  • An excellent credit score and history. If you have repossessions, collection items, judgements, late payments, and bankruptcies in the last five (5) years of your credit history, you will pay more for insurance. In extreme cases, you may even be denied. For example, I recently insured two (2) homes in Brooklyn. Both were in the same neighborhood, of similar construction, and had the same replacement cost. One familys premium was $1650.00, while the other familys premium was $2550.00. The difference? The first family owned a credit score you’d kill for. The second family owned a credit score which was killing them.
     
  •  Many companies will give you a first-year credit of 10-14% if you are a first-time homebuyer. Great, right? Just one thing: This credit decreases over a period averaging 10 years. Still, a great way to save money when you first purchase your home.
     
  • Along with number 2, purchasing a brand-new home  generates an additional discount.
  •  Installing a central-station monitored burglar and/or fire alarm system in your home will qualify you for policy discounts of 10-15% with most companies. Keep in mind insurance companies will not give you credit for the system without the proof of installation letter from the alarm company.
     
  • If an alarm system is not financially feasible, buy fire extinguishers. Along with the installation of deadbolt locks, you can realize a premium discount of 5%.
     
  • You should consider bundling your auto insurance with your home insurer. Some companies give up to a total of 30% in discounts, and this will be a nice piece of the savings “pie.” And, you also qualify for a similar discount on your auto insurance.
     
  • For more protection, you should considering purchasing a Personal Umbrella Liability policy. This policy provides added liability coverage starting in increments of $1,000,000.00. This generates more discounts and provides an extra layer of protection against third-party claims, whether or not they’re justified.
     
  • Choose a higher deductible. You’ll save about $200.00 annually by choosing a $1,000.00 deductible over a $500.00 deductible. If you bank the savings each year in what I call your “Deductible Account,” you’ll have your deductible in five (5), and have earned interest in the interim. Remember, “The higher the deductible, the lower the premium.”
     
  • Last but not least, consider your home’s construction. Brick homes usually cost less to insure than brick. Why? Remember, bricks get damaged, but wood burns.

So, What’s My Next Step?

Want more information, or your own up-to-date replacement / reconstruction cost estimate of your home? Well,  just drop me an email to [email protected]  or [email protected] . Please include your name and a daytime contact telephone number. Or go to my website, https://insuremeeg.com and download a copy of my Property Insurance Worksheet.

Thanks for reading, and please, tell a friend.

Wind vs. Water: Like Floods, A Debate Rages|Brooklyn Covered

You are literally better off having the 80-foot tree in your front yard fall into and cause part of the front wall of your home to collapse. Then, as the rainwater pours into and further destroys your home, you can rest easy in the knowledge it is a covered loss. Why? Because the covered cause of loss (the falling tree), preceded the additional loss from an outside source of water. If, however, a flood surged through your neighborhood and ripped the front wall away from your home first, you wouldn’t be covered, unless you owned a flood insurance policy with adequate coverage.

 

Wind vs. Water Equals Hurricanes vs. Floods

 

By my estimation, at least 50% of the losses faced by those who lost property in Hurricane Irene’s aftermath are not insured. Why? The losses they faced are directly attributable to flooding, not the hurricane-force winds. And many people in the Northeast don’t own a flood insurance policy.

Former Hurricane and Tropical Storm Lee will bring similar financial pain to Louisiana, Mississippi, Alabama and other Southern states. For insurance purposes, the damage suffered by most will be considered  caused by water, not wind, and thus not insurable.

The wind vs. water rages on.

 

What’s The Difference?

 

Most people will ask, “What’s the difference?” or “I have a homeowners policy and I suffered a loss to my home, so this should also be covered.” Unfortunately, damage by flood is not covered by your typical homeowners insurance policy.

Many communities in New York, Pennsylvania, Vermont, and New Jersey are monitoring the rivers, streams and levees with trepidation. Many home and property owners will face the double whammy of losing everything, and not having the means to rebuild.

Insurance Policies Make Good Reading. Seriously.

Most people don’t really read their homeowner or auto insurance policies until they suffer a loss, whether the loss is insured or not. Take a moment, find your homeowners policy, and give it a good read. While most people feel they know what’s covered under their policy, they really don’t.

You are literally better off having the 80-foot tree in your front yard fall into and cause part of the front wall of your home to collapse. Then, as the rainwater pours into and further destroys your home, you can rest easy in the knowledge it is a covered loss. Why? Because the covered cause of loss (the falling tree), preceded the additional loss from an outside source of  water. If, however, a flood surged through your neighborhood and ripped the front wall away from your home first, you wouldn’t be covered, unless you owned a flood insurance policy with adequate coverage.

Your homeowners policy specifically excludes coverage when damage to your home results from a source of water from outside your home.  This is why every homeowner should own a flood insurance policy, with limits equal to at least 80% of the homes Replacement Cost Value. (I’ll be discussing just what Replacement Cost Value is in a future post.) Renters, and co-op and condominium owners whose units are below the third floor in an apartment building should also own a flood policy, as well as those who rent or own townhouses.

So, before the next hurricane comes a-calling, this is a great time to purchase flood insurance equal to at least 80% of your homes Replacement Cost Value. Also, arrange an annual homeowners insurance policy annual review with  your insurance representative to guarantee you own, at minimum, 100% of the Replacement Cost Value of your home in your Homeowners Insurance policy.

Hurricane Irene Was No Bo Derek|BrooklynCovered

When a storm forms off the west coast of Africa, it begins life as a Tropical Cyclone. Once the Tropical Cyclone reaches sustained winds of 39 mph, it becomes a Tropical Storm, and remains so until the sustained winds exceed 74 mph.

Once the sustained wind reach 74 mph, we now have a Hurricane. These are categorized according to what is known as the Saffir-Simpson Wind Scale which measures wind velocity and based on this measurement, places a hurricane in one of five Categories.

If Hurricane Irene Was A “10”…

Remember the 1979 movie “10” starring Dudley Moore and Bo Derek? In this movie, Moore’s portrays a man stupefied by a woman whom he considers the most beautiful creature on the face of the earth. A woman he considers a perfect “10.” Well, Hurricane Irene was no “10.” 

Affected property owners who wondered if and how much their homeowners insurance would pay for wind damage should thank their lucky stars Hurricane Irene was either just a Category 1 or a Tropical Storm.

Isn’t A Higher Number Better?

Only if you think a Class A felony is better than a Class E. The Class E felony actually carries a lot less jail time than a Class A.

Cyclones work much the same way, where you’re punished for getting a higher grade.

What Are Hurricanes, And How Do We Measure Them?

When a storm forms off the west coast of Africa, it begins life as a Tropical Cyclone. Once the Tropical Cyclone reaches sustained winds of 39 mph, it becomes a Tropical Storm, and remains so until the sustained winds exceed 74 mph.

Once the sustained winds reach 74 mph, we now have a Hurricane. Hurricanes are categorized according to what is known as the Saffir-Simpson Wind Scale. The Saffir-Simpson scale measures wind velocity and based on this measurement, places a hurricane in one of five Categories:

  • Category 1 has wind speeds ranging from 74-95 mph. It’s damage potential is minimal. Hurricane Dolly in 2008 was a Category 1.
  • Category 2 has wind speeds ranging from 96-110 mph. Its damage potential is extensive. Hurricane Frances in 2004 was such a storm.
  • Category 3 has wind speeds ranging from 111-130 mph. It’s damage potential is devastating. Also in 2004, we had Hurricane Ivan.
  • Category 4 has wind speeds ranging from 131-155 mph. It’s damage potential is extreme. Hurricane Charley, another 2004 hurricane, wreaked havoc in Punta Gorda, Florida.

The year 2004 was a hot mess, wasn’t it?

  • And finally we have Category 5, which has a catastrophic damage potential. It’s wind speeds? Anything over 156 mph. I’ll never forget Hurricane Andrew in 1992, and neither will anyone else who lived in Miami-Dade County then. Andrew’s devastation was so great, building codes in Florida, like many of the houses, were strengthened.

How Does This Affect What My Homeowners Policy Will Pay?

Your homeowners policy contains two (2) deductibles for windstorm-related damage. Any  damage caused by either a Tropical Cyclone or a Category 1 hurricane will have a deductible equal to the higher of your all-perils deductible or $1,000. So, if your all-perils deductible is $500.00, you’ll pay $1,000.00. If however your all-perils is $2,500 or higher, that’s the deductible

Should the damage be caused by a Category 2 or higher hurricane, you’ll pay a deductible equal to anywhere from two (2) to five (5) percent of your Coverage A, or Dwelling Coverage. So, if your Coverage A amount is $500,000, and you have a 5% windstorm deductible for Category 2 or higher hurricanes, your deductible, or the part you’ve contractually agreed to pay for this loss, will be $25,000.00.

Yes, I’m serious. $25,000.00. Now you see why so many people become angry with their particular insurance company after a Category 2 or higher windstorm. They, like many homeowners, didn’t know how their policy covered different causes of loss. It really pays to read your policy and ask questions of your agent or broker if there is something you’re not quite sure of. Better safe than sorry, or, better covered than uncovered.

What Coverages Are Affected By Windstorm Deductibles?

The following Section I coverages of your policy: Coverage A (Dwelling); Coverage B (Other Structures); and Coverage C (Personal Property). Check your policy as different companies apply these deductibles to other policy coverages differently.

What Are Coastal Counties?

No matter where your property is located, should both Category 1 and Category 2 hurricane force winds exist during the same hurricane deductible period anywhere in any coastal county, the deductible for a Category 2 or higher hurricane will be in effect.

In New York State, the coastal counties are the Bronx, Kings (Brooklyn), Queens, New York, Richmond, Nassau, Suffolk, and Westchester. So a Category 2 in any of the coastal counties means you’d better have significant dollars in the bank to handle your deductible.

So again, let’s be thankful Hurricane Irene, in New York State at least, was just a Category 1, and dropped down to a Tropical Storm and eventually a Tropical Cyclone. Based on the amount of wind-related damage in several states, the devastation could have been far worse.

 

 

Hurricane Irene Preparation Tips From Travelers|BrooklynCovered

Re: Hurricane Irene Preparation

As Hurricane Irene approaches our area, we wanted to make sure you and your customers were aware of the steps you can take to stay safe and our claim response plans as the storm approaches.

I, along with all the other Travelers independent agents across this great nation, received the following information about preparing for Hurricane Irene. Normally, the content you’ll find in BrooklynCovered is my own, but in situations such as this, I trust you’ll forgive me for cutting and pasting some extremely important information.

To: Travelers Agents in New York

Re: Hurricane Irene Preparation
 
As Hurricane Irene approaches our area, we wanted to make sure you and your customers were aware of the steps you can take to stay safe and our claim response plans as the storm approaches.
 
Safety for individuals
 

  • Create a disaster plan. Plan an evacuation route in advance and determine where you would go if you were told to evacuate.
  • Prepare a survival kit. Stock up on drinking water, non-perishable goods, a first-aid kit and medicine for everyone including your pet. Include extra clothing, blankets, batteries, flashlights and a portable radio.
  • Conduct a home hazard hunt and make your home as safe as possible. Secure all outdoor objects such as garbage cans and lawn furniture. Close storm shutters and board up all windows.
  • Review how to shut off utilities in an emergency with all family members.
  • Locate important papers and documents and have them ready to take with you should you need to evacuate. Protect documents in plastic storage bags if you’re remaining in your home.
  • Make sure you have insurance policies with claim contact information, an inventory of your home’s contents and cash.
  • Ask an out-of-state friend to be your family contact. After a disaster, it’s often easier to call long-distance than to make a local call.
  • Finally, leave promptly when ordered to evacuate. Leaving too late or not leaving at all only endangers yourself and others.

 
Safety for businesses
 
In addition, you and your business insurance customers should consider taking the following precautions to help protect people and property and guard against disruption of operations:
 

  • Review your business continuity plan and communicate emergency evacuation and business interruption instructions to employees. If you don’t have a written plan, now is the time to create one. Each business should have an emergency plan including a detailed procedure for evacuation, a checklist for shutting down processes and protecting buildings, contents, equipment, and yard storage. Procedures should include salvage instructions to follow post-event.
  • Back up critical data and computer records off-site so that operations can continue after a disaster. Consider keeping a backup generator and plenty of batteries on hand so your business can continue to operate after a power loss.
  • As a hurricane approaches, quick actions should to be taken to install temporary protection features including:
  • Shutter or board up windows to protect them from flying debris
  • Clean out floor drains and catch basins to ensure maximum drainage
  • Anchor structures, trailers and yard storage so they are more likely to stay put in high winds
  • Fill emergency generator and fire pump fuel tanks
  • Shut down production processes safely
  • Shut off all flammable and combustible liquid and gas lines at their source
  • Shut off electrical power at the main building disconnect before the hurricane strikes
  • Once the storm has subsided and it is safe to return, a salvage team should be assembled and repair work prioritized, assuring proper supplies are available and safety procedures followed.

    •  

    Rain, Rain, Go Away…From The House|BrooklynCovered

    This video, the latest in the “Just Thought You’d Like To Know” series, uses a paper house and soda straws to demonstrate how best to carry water away from your home before the next “rainstorm of biblical proportions.”

    Gus the Roofer, Keith Huggins of Pusky Plumbing, and Curtis Godoy of Curtis Home Improvement are just a few of the most competent and reliable tradespeople I’ve ever had the honor of meeting. In fact, they’re the gentlemen I call to do work in my mothers house, so you know they must be good.

    This video, the latest in the “Just Thought You’d Like To Know” series, uses a paper house and soda straws to show how best to carry water away from your home before the next “rainstorm of biblical proportions.” Making “Rain, Rain, Go Away…From The House”, is no joking matter.

    This video was produced before the East Coast Earthquake and Hurricane Irene’s decision to pay a visit to the entire East coast of the United States.  In some of my upcoming videos and written blogs, I’ll be featuring some of the people every property owner should have on speed dial. 

    Gus the Roofer, Keith Huggins of Pusky Plumbing, and Curtis Godoy of Curtis Home Improvement are just a few of the most competent and reliable tradespeople I’ve ever had the honor of meeting. In fact, they’re the gentlemen I call to do work in my mother’s house, so you know they must be good.

    Here are two (2)  important tips: First, make sure you purchase and install a good sump pump with sufficient capacity for the area you want to protect from interior floods. A good place to purchase these pumps are Flatbush Hardware (Flatbush Avenue and Saint Marks Place in Brooklyn, NY), and of course, your local Home Depot and Lowes stores. Take time to ask questions so you’ll be sure to buy the pump you  need.   

    My second tip? Go to your local pet store and pick up a bag or two of the doggie wee-wee pads. These pads hold a tremendous amount of water, and can supplement buckets and pails should the roof begin to leak. You can use them to keep water from  seeping under your house and garage doors. Again, because of the amount of water they absorb and hold, they are a better alternative to rolled-up towels.

    Get Ready For Irene|BrooklynCovered

    “No matter where Hurricane Irene makes landfall, if she does so as a Category 4 Hurricane, she’ll be packing winds ranging from 131 to 155 miles per hour. The potential for damage from a hurricane like this is extreme.”

    Cue Winston Desmond…Or is it Desmond Winston?

    Tony Powell, the original “Soul Man” of the Imus in the Morning radio show has several laugh out loud characters he plays. One of my favorites, (along with Congressman Charles Rangel), is when he imitates a proud Jamaican. When Imus introduces him, he always says, “Everyting irie, I-man, everyting irie.”

    Well get ready because Hurricane Irene is coming, and we don’t really want the everything she’s bringing. The National Weather Service is projecting a storm track where Irene will “kiss” Bermuda (talk about your weather cooties).  According to the experts, while the entire east coast will be affected, Irene will probably make landfall anywhere from Miami, Florida to North Carolina.

    Yeah, right.

    To quote the Weather Girls,  have I got news for you. Based on the rainfall of biblical proportions we’ve “enjoyed” here in the New York Metropolitan area, Irene is coming to New York. Why, you ask? Gee, I don’t know. Maybe she wants to see “Memphis” on Broadway.

    No matter where Hurricane Irene makes landfall, if she does so as a Category 4 Hurricane, she’ll be packing winds ranging from 131 to 155 miles per hour. The potential for damage from a hurricane like this is extreme.

    Gee, no kidding.

    Folks, if you haven’t done so already, it’s time to prepare.

    Your home

    In  my of recent video posts, I demonstrated, using a little paper house, several of the ways to move water away from your home. Take the time either today or tomorrow to perform the following checks:

    1. Make sure your gutters are absolutely clear of any and all debris. Anything in your gutter will serve to impede the flow of water toward the downspout. You can go to your local hardware store, Home Depot, Lowes and buy mesh-like covers and screens which attach to your gutters. These devices will allow water to flow through and leaves, branches, baseballs, and beer cans to fall off the roof.
    2. Check to make sure your gutters are firmly attached to the roof. And make sure those roof edges are sealed or else water could seep under the shingles and into the house.
    3. Make sure the downspouts are also clear. And install a mesh screen in open downspout openings.
    4. Add at least a 2-3 foot or even longer extension to the end of each downspout not routed directly into your main drain or drywell (And when’s the last time you had them checked or cleaned?). The further away from the building water is carried, the better.
    5. Check the landscaping around your home. Make sure the land, ground or cement which meets the walls of your home slopes away from the house, not towards it. It doesn’t make sense to do numbers 1-4, only to have the water pool around the foundation so it looks like you’re having folks over for a pool party.
    6. If you own the type of home which sits on a slab, and/or has a roof attached to the walls by clips, check to make sure these connections are tight and waterproof. Hurricane Andrew, the Irene of 1992, showed too many people their houses weren’t as well constructed as they thought.
    7. Sump pumps. Every home should have at least one sump pump.  Just one thing – test it/them to ensure operational integrity. In other words, make  sure it/they work.
    8. Inspect your roof and make temporary repairs to loose shingles, cracked tar paper and similar defects. Or, even better, secure a tarp to the roof.
    9. Hopefully, you’ve purchased flood insurance, and are past the normal 30-day waiting period. Should the flood waters rise, the land fall, or the mud slide, you’ll be glad you bought it.

    You And Your Family

    You and your family must have a family emergency plan. While you’ll find a more detailed list at www.Ready.gov (click on Get A Kit and Make A Plan), here are some basic ideas:

    1. Each family member should know exactly where everyone will reunite after a disaster.
    2. If you can’t use the first designated spot, make sure you have a backup site where you’ll meet.
    3. Know how to get out of your home and neighborhood. And practice using these escape routes.
    4. Have an out-of-state friend  or relative everyone can call to tell of their well-being and location.
    5. Purchase a water and fireproof security chest or safe and keep copies of your important documents there. When at all possible, keep originals in a safe deposit box.
    6. Make copies of the front and backs of all credit and debit cards, and drivers licenses.
    7. Have emergency cash, if the ATMs are not functioning.
    8. Make sure every family member has a Go Bag. Go to www.Ready.gov to see what should be in your bag.
    9. Prepare a stash of emergency supplies for your home. For example, non-perishable canned foods, one gallon of water for each person for each day for at least 4 days. Some other items are a first-aid kit, flashlights and extra batteries, whistles, toothbrushes, toothpaste, soap, and feminine hygiene products.

    You’ll find videos on preparing for emergencies at https://insuremeeg.com/Emegency_Preparedness.html. Actively use this information and you and those you love will increase your chances of better surviving a local or national disaster.

    And about the earthquake we had earlier, I apologize for making the earth move as I did. Carry on.

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