CANDLE-LIT FIRES

As the popularity of candles grows, so does the incidence of fires in the home. According to the National Fire Protection Association, candles are responsible for starting more than 15,000 home fires each year, which is twice the number of recorded in 1980. An estimated 4% of all house fires are started by candles, and four out of ten candle-ignited fires start in the bedroom. Candle fires also occur most frequently in December, when 13% of the fires involve holiday decorations. Many of the fatalities caused by candle-lit fires occurred among people who were using candles to light homes in which the power had been shut off. Homeowners are urged to use flashlights for illumination and bulbs for decoration whenever possible.

With the holidays here, many people will be lighting candles in hallways, dining rooms, and living rooms. Candles add ambiance and warmth to any room, but they are also a fire hazard. Never leave a candle unattended, and be sure to have a fire extinguisher on each floor of your home. Never place a candle in reach of children or near combustibles such as curtains, draperies, and decorations.

Pursue Those Auto Insurance Discounts

One way to avoid paying too much for your personal automobile insurance is to assure you are getting all the discounts you deserve. The following are discounts you should inquire about. Some may not be available in all states and from all insurers, but it doesn’t hurt to ask. These discounts may significantly affect your insurance premium.

• “Defensive Driving Discount.” This discount can save you 10 percent on most of the major coverages under your auto policy, such as liability, medical payments, and collision coverage. Defensive driving courses can cost as little as $20 and last as few as 5 or 6 hours. However, the discount normally applies for 3 years. For example, if your auto insurance premium is $100 per month, the premium is $3,600 for 3 years. If liability, collision, and medical payments or personal injury protection coverage constitute 85 percent of this $3,600 premium, the resulting premium subject to this discount is $3,060. In this scenario, the actual premium savings would be $306 (10 percent of $3,060) for that
• 3-year period. To get the true savings, you must deduct the cost of the defensive driving class. If the cost is $26, the savings in this example would be reduced to $280. If you spend 6 hours taking the class, you are earning $47 per hour in savings—not an unproductive way to spend a Saturday!
• “Good Student Discount.” Statistics show that good students tend to be more reliable and mature than students with marginal grades, leading to better driving decisions. Therefore, many states allow a 5 to 10 percent discount if your student driver makes good grades, usually an overall “A” or “B” average in high school or college. If your child has to pay his or her own automobile insurance, this will be another motivator for him or her to make good grades.
• “Home/Car Discount.” Many insurers offer discounts of 10 percent or more if they pro-vide both your homeowners and personal automobile insurance. This can lower your costs on both policies.
• “Auto Safety Features.” Most insurers recognize that owners with cars containing safety features may have fewer accidents and reduced injuries. Many insurers encourage drivers to purchase cars with antilock brakes by giving small discounts for these safety features. Other insurers give discounts for vehicles with airbags and daytime running lights.
• “Auto Club and Professional Organizations.” Some insurance companies offer auto insurance discounts if you are a member of AAA or similar organizations.
• “Multicar.” Many insurance companies provide generous discounts up to 15 percent if you have multiple cars on your policy. This reduces the insurance company’s administrative costs, on a per-vehicle basis, in issuing the policy.
• “Long-Term Customer.” More insurance companies are offering discounts of 5 to 10 per-cent if you stay with them at least 5 years.
• “Claims-Free Customer.” If you have been insured with the same insurance company for at least 3 years and have not experienced any losses, inquire about a claims-free customer discount. These discounts help insurers retain customers with excellent driving records.

Are the Limits of Insurance for your Home Accurate?

Is the amount of property insurance on your home correct? What is the appropriate amount of coverage for your home? To begin with, it should be insured for at least 80 percent of its replacement cost when covered under a standard homeowners policy. Replacement cost refers to the amount necessary to repair or replace damaged building parts with items of like kind and quality. Some insurance companies even require 90 percent or higher figures when the guaranteed replacement cost option is offered. With this option, the policy pays the full cost of replacing your home, without any depreciation and often without a maximum reconstruction payment. (This gives you added protection if there is a sudden jump in construction costs due to a major shortage of certain building materials. Construction costs often “surge” following large catastrophes, such as hurricanes.) Note that guaranteed replacement cost coverage approaches can vary by state and is not even available in every state.

Many homes are either underinsured or overinsured. For example, some homes insured for long periods of time with one insurance company may have inadequate limits of insurance due to increased building costs. In many cases, homes have been remodeled and improved, and this information has not been conveyed to the insurance agent or company, resulting in severe underinsured home values. If your home is underinsured, you not only have inadequate protection for total losses, but you may also lack full protection for smaller losses.

Sometimes homes are mistakenly insured for their market value. However, market value is normally not indicative of the home’s replacement cost. For example, market value also reflects the cost of the foundation and the nondestructible land value, both of which normally survive intact if the house burns to the ground and has to be rebuilt.

In addition, some homes may be insured improperly to meet mortgage company requirements. Some mortgage companies require the amount of insurance be at least equal to the mortgage balance on the house. The mortgage balance is also not reflective of the home’s replacement cost, which is often considerably more but can also be less. Insurance companies and agents often struggle in properly educating mortgage companies about these distinctions, but there is nothing to prevent you from insuring to actual replacement cost if that is indeed greater than the mortgage balance. The problem occurs when the mortgage balance is greater than the replacement cost, which will result in the purchase of a higher limit than needed.

The bottom line is that you should work with your insurance agent to determine the correct replacement cost and resulting insurance limit for your home. Most agents use sophisticated replacement cost estimating packages that can fairly accurately determine the replacement cost value of your home. Factors that these programs use to determine this figure include the following.

• Square footage of the home, including its configuration
• Construction costs for your community
• Exterior wall construction type, including frame, stucco, brick, or brick veneer
• Style of home
• Number of bathrooms and bedrooms
• Roof type
• Attached garages, fireplaces, built-in cabinets, and other special features, such as hard-wood floors

The more advanced replacement cost estimating programs require detailed information to improve the valuation estimate. For example, a rectangular-shaped home with 1,800 square feet will have a much lower replacement cost than a similar-sized home with an “L” shape. In other words, the better cost estimating programs require information about the number of corners in the home. The more detailed information your agent asks about your home, the more confidence you can place in his or her recommended limit of insurance.

As a final note, you should request an annual review of your homeowners policy to keep up with increasing building supply and labor costs. Also ask your agent about the advisability of adding an “inflation guard” endorsement to your policy or about the availability of guaranteed replacement cost coverage to help assure that your home is properly protected.

Insurance Purchasing Ideas for Homeowners

In some parts of the country, consumers have faced substantial increases in their homeowners insurance premiums, particularly in coastal areas subject to hurricanes and windstorms. Other consumers have experienced reduced coverage, moving from all risks coverage for their dwell-ing to named perils coverage. Still others have received nonrenewal notices due to minor losses, such as water damage claims. The following are some insurance purchasing tips that may help you save premium dollars and reduce losses on your homeowners policy.

1. Try to increase your deductible to the highest one you can afford, even if the premium savings do not appear to justify it. This will decrease your premium and increase the likelihood that your loss history will be excellent, since minor losses will be paid by you and not your insurance company. A loss-free record over time saves premium dollars. For ex-ample, if you currently have a $250 deductible on your homeowners policy, consider in-creasing it to $500 or $1,000.

2. Consider purchasing a monitored burglar alarm. Alarms have proven successful in reducing burglary rates. In addition, most insurers provide premium discounts to consumers with these alarms, some as high as 20 percent.

3. Maintain your home in optimum condition. If a repair is needed, perform it as soon as possible. For example, loose or missing roof shingles should be repaired or replaced immediately. A home in excellent condition is much less likely to experience a loss.

4. If you plan to buy a home, be aware that many insurance companies offer new home discounts. Some insurers offer the highest discounts, such as 20 percent, on brand-new homes and gradually lower discounts for several years as the home ages. Some insurance companies are now offering discounts for homeowners who are age 50 or older.

5. Request a copy of a Comprehensive Loss Underwriting Exchange (CLUE) report on the home you are considering buying. This report provides a list of prior losses for a particu-lar home. It is generated from a database of insurance losses compiled by a high percent-age of insurance companies. You can normally contact your current homeowners agent to get this information on a prospective home. Be wary of purchasing a home with prior foundation, water, or mold losses.

6. Install and maintain smoke alarms throughout the house. It is best if the alarms are inter-connected, so that if one goes off, they all go off. Test the smoke alarms once a month. These detectors should be approved by Underwriters’ Laboratories (UL) or other recog-nized testing laboratories. Most insurance companies provide discounts for homes with operating smoke alarms.

Safe Driving on the Freeway

As you are aware, automobile accidents are a major cause of death in the United States. They are the single most common cause of death among children and young adults, according to the U.S. De-partment of Transportation’s National Highway Traffic Safety Administration (NHTSA). The NHTSA reports that over 6 million police-reported automobile accidents occur annually, which constitutes 1 every 5 seconds. On average, a person is injured in 1 of these crashes every 10 seconds and a person is killed every 12 minutes.

A high percentage of these automobile accident deaths occur on our nation’s freeways and high-ways due to the high rates of speed encountered. There are, however, steps you should consider to reduce your chances of becoming a victim on the freeway, including the following.

1. When you merge onto the freeway, you should be at average traffic speed.
   
   
2. When in the right lane of a freeway, move over one lane to the left when you see drivers coming into traffic from the entrance ramp. If this is not possible, slow down to give the en-tering driver more room.
   
   
3. Allow plenty of room between you and other vehicles. Many driving experts advocate the two-second rule. Under this rule, you should start counting when you see the vehicle in front of you pass a fixed object. Count “one thousand one, one thousand two.” If you reach the fixed object before “two,” you are following too closely.
   
   
4. Try to maintain average traffic speed. Vehicles going much slower or faster than other traf-fic are a recipe for an accident. However, common sense regarding speeding laws must also be considered.
   
   
5. You should use extra caution when driving at night or in bad weather. Remember that many drivers do not adjust their driving habits for the weather or bad road conditions.
   
   
6. Avoid any sudden moves, since this does not give other drivers time to react.
   
   
7. Continuously scan the roadway ahead of you for signs of trouble, including construction and traffic slowdowns.
   
   
8. Be aware of the positions of other drivers around you, particularly those beside you or slightly to the rear. Make sure your rearview mirrors are properly adjusted before you drive your car.
   
   
9. Remember that your reaction time and overall driving skills decline as you get tired. Breaks every few hours are important.
   
   
10. When exiting the freeway, be sure to signal well in advance. Do not slow down significantly until you start to turn off the freeway.

Take Steps to Prevent Dog Bites

Did you know that dog bites cause nearly 800,000 injuries requiring immediate medical care in the United States each year? This statistic is based on a study conducted by the National Center for In-jury Prevention and Control. If your dog bites someone, you can be held legally liable. (Fortunately, this loss is normally covered by your homeowners policy.) However, there are steps you can take to reduce or prevent dog bites, including the following.

1. Carefully consider dog breeds prior to selecting a pet. Some breeds have worse reputations than others, and a veterinarian can help you decide which breeds might best fit your life-style. Note that some insurers will not insure you for homeowners insurance if you have a breed that is viewed as more dangerous than others, such as a Pit Bull.
   
   
2. Spay or neuter the animal as this often decreases the aggressive tendencies of dogs.
   
   
3. Seek a veterinarian’s advice quickly if your dog becomes aggressive.
   
   
4. Socialize your dog from an early age to encourage appropriate behavior.
   
   
5. Never leave dogs alone with small children.
   
   
6. Avoid aggressive games with puppies and dogs, such as tug-of-war.
   
   
7. Do not place your dog in situations where he or she can be teased or feel threatened.
   
   
8. Train your dog to obey commands.

There is one other loss exposure concerning dogs you should consider. You may face liability claims if your dog gets out into the road and causes or contributes to an auto accident. Homeown-ers can be sued for violation of leash ordinances by allowing their dog to “run at large.” Use a well-maintained and sturdy fence or other safeguards to reduce this exposure.