March 21, 2023

Bucks Blog: Dog Bites Can Raise Your Insurance Premiums

A trainer in Los Angeles reveals a dog's teeth while demonstrating how to avoid dog bites.Associated Press A trainer in Los Angeles reveals a dog’s teeth while demonstrating how to avoid dog bites.

Dog bites continue to represent one-third of the payout dollars for homeowner liability claims, according to the latest data from the Insurance Information Institute and State Farm Insurance.

Insurers paid more than $489 million for such claims last year, according to the institute, an industry group.

While the actual number of dog-bite claims fell 1.4 percent in 2012, to just under 16,500, the cost of settling claims rose 1.2 percent, so the total cost was essentially flat. The average cost paid per claim was $29,752 last year, compared with $29,396 in 2011.

Loretta Worters, a spokeswoman for the institute, said some companies include in their statistics dog-related injuries that aren’t necessarily actual bites, such as if a dog jumps on someone or startles them, and they fall and are injured.

The claims are paid under homeowners’ liability insurance, which covers you if your dog bites someone visiting your home or if it bites someone when you take it out for a walk.

Homeowners’ insurance generally covers dog liability as part of the policy’s standard coverage, with limits of up to $100,000 or $300,000.

Ms. Worters said most insurers don’t ask about dogs when initially writing a homeowner’s policy. But once a dog bite occurs, insurers may increase your premium or even exclude the dog from coverage under your policy, depending on the severity of the injuries. Some insurers exclude certain breeds of dog from coverage.

State Farm said it paid more than $136 million to cover nearly 4,500 dog bite claims last year. The company said it did not refuse insurance based on the dog’s breed, but it urged owners to be responsible with their pets.

Various organizations have been publicizing dog bite information because of National Dog Bite Prevention Week, the third full week in May.

The Centers for Disease Control and Prevention say 4.7 million dog bites occur each year, and more than half of the victims are children. The Postal Service says roughly 5,900 postal carriers were attacked by dogs last year. Los Angeles topped the list of cities based on dog attacks on letter carriers, with 69 attacks reported in fiscal 2012.

A nonprofit organization called Prevent the Bite offers tips for helping people, especially children, to avoid dog bites, based on the “W.A.I.T.” principal for approaching unfamiliar dogs:

–Wait to see if the dog is with its owner and if it looks friendly.
–Ask the owner for permission to pet a dog.
–Invite the dog to sniff you, while you stand with your hands curled at your side.
–Touch the dog gently to pet, never at its face or tail.

If the dog looks unfriendly; if its owner declines to let you touch the pet; or if it doesn’t approach to sniff you, stop and walk slowly away.

Has your dog bitten someone? Did it affect the cost of your insurance?

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A Minimum $10 Billion in Damages Is Estimated

Eqecat, a company that tracks natural disasters and estimates their cost, said it expected the storm’s total economic damages to range from $10 billion to $20 billion, which includes damage to homes and cars, and business lost because of the storm. The company said the insurance industry would be responsible for covering $5 billion to $10 billion of that, a smaller amount in part because insurers generally don’t cover the flooding of homes and businesses. A federal government insurance program would most likely pick up much of that uncovered cost.

Insurance payouts toward the lower end of the Eqecat estimate would be on par with the $6.4 billion insurers covered in Hurricane Rita in 2005. According to the Insurance Information Institute, the most expensive hurricanes, in inflation-adjusted dollars, were Katrina in 2005, with $47 billion in insured losses; Andrew in 1992, with $23 billion; Ike in 2008, with $13 billion, and Wilma in 2005, at $12 billion, all of it in Florida.

Robert Hartwig, president of the Insurance Information Institute, said the property and casualty industry had the resources to absorb losses estimated for this storm. Until now, the industry had been having a year of minimal losses from natural disasters.

Eqecat noted that about 20 percent of the United States’ population lived in the areas exposed to Hurricane Sandy’s impact.

AIR Worldwide, a company that models hurricanes and estimates their damage, said the value of insured properties in New York State’s coastal areas was $2.7 trillion. The only state with hurricane exposure that has a higher total property value is Florida, with $2.8 trillion. Texas is a distant third.

Homeowners’ insurers with the biggest market share in New York State are State Farm, with 15.5 percent of premiums written; Allstate, with 15.2 percent; and Travelers with 10.9 percent. The figures, provided by SNL Financial, do not take into account reinsurance arrangements, which are typical in the property and casualty business and help spread risks across a larger group.

The largest auto insurers in New York State are Berkshire Hathaway, with 26 percent of the market; Allstate, with 18.1 percent; and State Farm, with 12.5 percent.

Leading commercial insurers in New York include the American International Group and State Farm, which has a large workers’ compensation program.

AIR Worldwide’s principal scientist, Tim Doggett, warned of possible record-setting storm surges in east-facing bays, such as Long Island Sound, Raritan Bay and the New York City Harbor. Manhattan’s sea walls stand five feet above the average sea level, and storm surges up to 11 feet are being predicted.

Standard homeowners’ insurance policies do not cover flood damage, nor do commercial policies, although auto insurance often includes coverage for flooding. This means much of Hurricane Sandy’s cost is likely to be borne by the National Flood Insurance Program, in which the federal government covers flood claims in communities that have adopted local flood plain management ordinances.

The program paid out $1.3 billion to cover claims in all states affected by Hurricane Irene in 2011. The industry racked up $4.3 billion in losses in that storm.

AIR Worldwide said the biggest unknown was what would happen in the days immediately after landfall; although the winds would slow, the storm was expected to linger in the region and could continue to wreak destruction in Washington, Pennsylvania and New York until as late as Wednesday.

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Bucks Blog: Do You Have a Hurricane Deductible?

An uprooted tree rests on a house as Hurricane Isaac passes through New Orleans.ReutersAn tree uprooted by Hurricane Isaac rests on a house in New Orleans.

Many homeowners in Louisiana who were affected by Hurricane Isaac are probably getting familiar with an aspect of their insurance policies known as a hurricane deductible.

Deductibles are the portion of damage the homeowner pays out of pocket before insurance kicks in. For most “perils,” as the industry calls them, the standard deductible is a flat amount — say, $500 or $1,000. But coastal states from Maine to Texas have special rules for hurricanes, put in place to limit insurance losses after catastrophic storms.

Details vary from state to state, and from insurer to insurer. But generally, when a hurricane (or, in some cases, a named storm) is declared by the National Weather Service, special hurricane deductibles apply for resulting damage. Such deductibles are generally a percentage of the home’s insured value, and usually run from 1 to 5 percent. So, for instance, if a home is valued at $300,000, the deductible could be as high as $15,000.

In some areas, homeowners can buy extra coverage — that is, lower their deductible — in exchange for paying higher premiums; some high-risk areas don’t offer this option, however, according to the Insurance Information Institute, an industry group.

The institute lists details of hurricane deductibles by state on its Web site.

Hurricane coverage in standard insurance policies generally covers wind damage — both to the home, and to personal belongings — since many items become projectiles during hurricanes. “If its wind, it’s covered — but if it meets hurricane criteria, it’s a different deductible,” says Jeanne Salvatore, a spokeswoman for the institute.

Flood damage, however, is covered only if you purchase special flood insurance — generally, from the National Flood Insurance Program, or from some private companies.

Blythe Lamonica, spokeswoman for the Gulf State Insurance Information Center in Baton Rouge, La., said hurricane deductibles apply for damage from Hurricane Isaac in Louisiana. The nonprofit organization, which provides consumers information about insurance in Louisiana, has urged homeowners to review their policies before hurricane season to make sure they know their coverage, she said. Generally, insurers in the state must make the section on hurricane deductibles prominent in written policies, she said, such as by using large type or bold print.

While such deductibles apply, they can be enforced only once a given year. So if a second hurricane were to hit, standard deductibles would apply, she said.

Have you had to pay for a hurricane deductible? How much did it cost you?

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In Wake of Natural Disasters, Insurers Brace for Big Losses

Now, as homes are repaired, fields are pumped and factories are cleaned out, the damage assessments will mount, and another measure of the impact will come into clearer focus: the cost to insurance companies.

Based on nearly two dozen interviews with farmers, business owners, analysts and government officials, private insurance companies are likely to experience at least $10 billion in insured losses this year, mostly associated with the tornadoes and the flooding along the Mississippi, based on property damage, lost inventory, business interruption and disrupted crop plantings.

Insurance industry and risk analysis experts arrived at their projections by adding median damage estimates for the worst of the tornadoes so far. The tally will rise when private-sector insurance flood and crop claims associated with the Mississippi River flooding are tacked on and hundreds of other tornadoes and severe winter weather events are factored in.

“Natural catastrophe losses in the United States are likely to be well over $10 billion by the end of 2011,” said David Smith, the senior vice president of Eqecat Inc., a catastrophe risk modeling firm. And Robert P. Hartwig, president of the Insurance Information Institute, said that just one “relatively minor” hurricane this year could push the total private insurance catastrophe losses in 2011 above the $13.6 billion paid out in 2010.

Whatever the numbers prove to be, analysts acknowledge that the geographic and economic range of damage is vast. Farmland is still submerged, meaning farmers must wait until the water fully recedes to determine whether the soil is fit to replant. Damage assessment teams are still fanning out in tornado zones, surveying the destruction.

And there is also uncertainty about what insurance policies will cover, a question recently on the mind of Austin Golding, a 25-year-old manager in his family’s barge business in Vicksburg, Miss. Like other business owners along the Mississippi, Mr. Golding took pre-emptive measures when the river started to rise, moving equipment and staff members to portable trailers on higher ground and putting the main office on blocks, a costly operation that he said saved the insured building from water damage.

“I think we are probably going to try to recoup what we spent in trying to avoid a total replacement” of the building, Mr. Golding said. He added that they would at least try to negotiate a decrease in the premium.

The Mississippi River areas that were flooded include two million to more than three million acres of farmland and pasture, said Michael Cordonnier, a consultant with the Soybean and Corn Advisor, an information service for the commodity industry. Houses, ports, casinos, hotels, grain elevators, infrastructure, fisheries and other facilities are among the sources expected to generate claims from damages.

In addition to the flooding, some of the worst tornadoes in decades have struck this year. As of Wednesday, there have been at least 518 fatalities from tornadoes in the United States, just behind the 519 in 1953, the highest number since official record-keeping started in 1950, said Gregory Carbin, a National Oceanic and Atmospheric Administration meteorologist.

Just the tornadoes that affected Alabama and neighboring states in the last week of April, and Joplin, Mo., in May, could produce insured losses of $4.5 billion to $8 billion, said Mr. Hartwig of the insurance institute. Eqecat Inc. estimated insured losses at $2 billion to $5 billion in the April week and $1 billion to $3 billion for Joplin. AIR Worldwide, a risk modeling and consulting firm, said it estimated $3.7 billion to $5.5 billion in insured losses for tornadoes and other severe weather events, including Alabama’s, in just one week: April 22 to 28.

Catastrophes are defined in the industry as any single event with $25 million or more in insured losses. The biggest catastrophe to hit the industry’s insurers was Hurricane Katrina, which generated $45 billion, adjusted for inflation, in insured losses for houses, businesses and vehicles.

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