By CHRISTINE LEGERE firstname.lastname@example.org
September 27, 2013
A heavy downpour in 2011 caused flooding on Barnstable Road in Hyannis.
Cape Cod Times File/Jim Preston
Local, state and federal officials are mobilizing to delay dramatic hikes in flood insurance premiums rapidly coming down the pike for property owners in flood-prone areas.
The increases are part of a federal law designed to return the National Flood Insurance Program to the black. The government-subsidized program has been driven nearly $30 billion into the red by storm damage over the last several years.
On Thursday, the entire Massachusetts congressional delegation signed on to a letter delivered to House and Senate leaders saying they recognize the aim of Biggert-Waters Flood Insurance Reform Act of 2012 but they urge a delay in premium increases until a cost study, mandated in the act, has been done.
There are so many things that should be considered before you purchased insurance.
For example; you already know that every community has building ordinances or zoning laws that affect how houses are built or updated.
But did you know that there are also laws and ordinances that govern how or whether a house can be repaired after a loss?
When you have a loss that damages part of your house, the repairs, in many situations, must be made to the specifications of any regulations that are in effect at the time of the loss.
It doesn’t really matter if everything met code when your house was built. What matters now is the new building code.
Even more important than that, there are regulations that may compel you to tear down the house if the damage is more than 40–50 percent of its value.
You’re probably thinking: “So how does that affect me? Isn’t that what insurance pays for?"
Well…the answer is yes and no at the same time! Insurance pays for the cost to repair or replace the damaged part of the building.
Think of it this way: if the value of your house is $200,000 and you have $100,000 in damage, insurance pays for the damage (minus your deductible, of course).
But now that your house has sustained damage equal to 50 percent of its value, the law kicks in and requires you to tear it down—damaged and undamaged parts—and rebuild the whole thing!
Now, since insurance pays for the damaged part of the building, but even the undamaged part has to be torn down, where does the other $100,000 come from? Well, that’s where Ordinance or Law coverage comes in.
There are very few total losses; partial losses are far more likely. But a partial loss could trigger the enforcement of an ordinance or law that could cause you to have to pay more than the amount of loss covered by your policy.
Additional coverage may be purchased that would help pay for the value of the undamaged part of the house and the increased cost to rebuild according to the new code.
Replacement value doesn’t mean upgrade cost what if this happened to you…A fire causes major destruction to your building.
Because more than 50% was damaged, a local by-law requires the building to be torn down and rebuilt to current building codes.
You’re a responsible person and take the necessary steps to maintain your property. You have replacement cost value on your policy, so you’d be fully covered…right? Not necessarily.
Property insurance policies generally have an “Ordinance or Law” exclusion, which means that the policy covers the building as it exists, but it does not cover the cost to upgrade the building to current building codes and ordinances after a loss.
Therefore, having “replacement cost” coverage for your building does not mean that you have “upgrade cost” coverage, unless you purchase an “Ordinance or Law endorsement” for your property.
Even if a property policy offers some built-in Ordinance or Law protection, often the amount of coverage isn’t sufficient in a major loss.
Building codes and zoning laws affect every piece of property no matter how big or small. These laws are continually changing…requiring new or improved features such as better wiring, handicap access, sprinkler systems and more.
If a loss situation triggers code upgrades, it could be financially devastating unless you have Ordinance or Law coverage.
While some regard this coverage to be important only for older buildings, laws are always changing, and newer buildings can be affected. This is an area of concern for all building owners.
How ordinance and law coverage protects you:
By Todd Wallack | BOSTON GLOBE STAFF JANUARY 28, 2013
Competition in the state’s car insurance market has yielded an unexpected benefit: Thousands of residents who once had to buy expensive home coverage from the Massachusetts FAIR Plan are increasingly able to find policies through other insurers, saving them hundreds of dollars a year on premiums.
The FAIR Plan, known as the insurer of last resort, provides home insurance in high-risk areas, including neighborhoods that have high crime rates or sit perilously close to the ocean. Home insurance companies have traditionally been reluctant to do business in such locations.
But since the state gave insurers more freedom to set their own auto insurance rates, starting in 2008 — something it calls “managed competition” — 13 more auto insurance companies have set up shop in Massachusetts, with most also selling homeowners policies or partnering with firms that do.
Over that time, the FAIR Plan lost nearly 27,000 homeowners insurance customers, or 16 percent of its base, an exodus few in the industry predicted.
“It is all driven by this shift in the competitive marketplace,” said Robert Tommasino, general counsel for the Massachusetts Property Insurance Underwriting Association, better known as the FAIR Plan.
Some insurers, including Narragansett Bay Insurance Co., also decided the escalating prices of premiums for coastal properties made it worth their while to start selling policies in those locations. Their strategy has been to undercut the FAIR Plan rates while still charging enough to turn a profit.
Bob Inello, whose waterfront home in Nahant is exposed to the wrath of storms, said he was forced to buy Fair Plan coverage for more than a decade. But three years ago, Inello said, his agent said he could switch to Narragansett, cutting his bill by $570 a year — more than 20 percent.
“I don’t feel like I am being held hostage anymore,” Inello said. “It’s very liberating.”
The risk of catastrophic loss during hurricane season requires an innovative approach to
property coverage—and a rapid response when losses occur. For over 40 years, Lexington
Insurance Company has helped our brokers and clients prepare for, protect against, and recover
from catastrophic losses. We are the leading U.S.-based surplus lines insurer, and a property
and casualty market leader.
Make sure you’re a step ahead of risk this hurricane season. Watch LexTV for the latest
on hurricane risk and coverage solutions.
Hurricane 2012 Update
Dr. Phil Klotzbach updates his 2012 seasonal hurricane forecast and shares his outlook for the remainder of the season. This episode also introduces Lexington's new Hurricane Infographic which will help streamline the understanding of a hurricane event.
All interests from Louisiana to Mississippi, Alabama and the Florida Panhandle should rush preparations to completion.
If peak storm surge occurs at high tide, peak water levels above ground could reach the following depths as Isaac moves by:
- Southeast Louisiana, Miss., Ala. coasts: 6-12 feet
- South-central Louisiana: 3-6 feet
- Florida Panhandle: 3-6 feet
- Florida west coast from Apalachicola to south of Naples: 1-3 feet
Even as Isaac's center of circulation moves by, locally heavy rainbands can be expected. Another 1-3" of rain is possible in central and south Florida with locally higher amounts. Isolated storm total rainfalls of 15" are possible in central and South Florida. Rainfall amounts over 10" are likely as Isaac slows down immediately prior to, and after landfall, in southeast Louisiana, southern Alabama, Mississippi and the western Florida Panhandle. Isolated 20" amounts are possible.
Hurricane threat index, current information, satellite imagery, watches/warnings and computer model track graphics are below.
(TRACK ISAAC: Interactive hurricane tracker)
View more expert analysis from Senior Meteorologist Stu Ostro at our Tropical Update article.
You can find a detailed look at the Gulf Coast storm surge, wind and flooding threats by clicking on this link and you can ensure you know which friends may be in harms way through our My Friends Weather tool.
(MORE: Live updates and analysis on Isaac)
Cape Cod, Massachusetts
As Hurricane Irene approaches the east coast Disaster Specialists would like to remind everyone that our staff will be on-call throughout the storm 24/7 for any and all emergencies that may arise. Serving Cape Cod, the Islands, the South Coast and the South Shore. 1-800-675-3622
Since 1985 Disaster Specialists has been helping home and business owners with the unexpected. Fire, Flood, Vandalism, Mold, Natural Disasters and even some not-so natural disasters we are here to help. Our crews are on call 24 hours a day, 7 days a week, 365 days a year. Through all phases from clean up to reconstruction. Disaster Specialists will work with you and your insurance company to have you back on your feet as quickly as possible. At Disaster Specialists we make disasters disappear!
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Davidson Calfee is the Owner and President of Operations, overseeing overall portfolio management, agency relations and new business generation. He has a natural ability to manage complex situations and achieve outstanding results for his clients.
Calfee is constantly looking for ways to improve professionally and has worked diligently to revamp his team’s handling of the needs and expectations of his clients.
Calfee specializes in developing, designing and implementing complex property catastrophe insurance programs for his clients. His market knowledge and client service skills have made Calfee a sought-after property resource for Massachusetts coastal residents.
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