If passed, the provisions set forth in Arizona’s House Bill 2463 would define several unlawful practices when dealing with auto glass claims—for example, submitting claims in instances where the work wasn’t provided; submitting claims with references to geographic areas in which the work was not completed; submitting claims in which the owner of the vehicle didn’t authorize the work; and showing work performed on a date other than when it was actually performed.

The bill also would prohibit auto glass businesses from signing a work order or claim form “falsely” on behalf of a policyholder.

H.B. 2463 also includes several provisions about “misrepresentations.” It prohibits auto glass businesses and associates from misrepresenting their relationship to a policyholder’s insurer; the cost of the proposed repairs; and whether the insurer has improved the repairs or replacement.

The proposal also would make it illegal for auto glass businesses to “represent to a policyholder or other person that the repair or replacement will be paid for entirely by the policyholder’s insurer and at no cost to the policyholder unless the person making the statement is employed by or is a producer contracted with the policyholder’s insurer.”

The bill specifies that it is illegal to “add to the damage of auto glass before repair in order to increase the scope of repair or replacement or encourage a policyholder or other person to add to the damage of auto glass before repair.”

Finally, H.B. 2463 also outlaws performing working “substantially beyond the level of work necessary to repair or replace the auto glass.”

The bill was introduced by Rep. Nancy McLain (R).

If you’ve got a TV, you probably know about “hoarding.” The compulsive collecting and storing of stuff, stuff, and more stuff is the focus of the A&E show “Hoarders” or countless local television specials. You may know that hoarding is a psychiatric disorder: To cope with anxiety and depression, some hoarders fill their living space with rotting waste and canyons of refuse reaching to the ceiling, with only narrow paths between.

According to the National Alliance on Mental Illness, people with a hoarding compulsion collect anything, including scraps, newspapers, clothing, containers, rocks, garbage and even excrement.

But did you know that hoarding is an insurance risk and that hoarders risk having their home insurance cancelled? Too much stuff signals trouble to an insurer, says Terry McConnell, vice president and manager of personal lines underwriting for Erie Insurance Group, in Erie, Pa. hoarding presents an insurance risk in three areas: fire, liability and overall neglect of the home.

Hoarding signals increased risk

When he trains agents to identify risk, McConnell tells a story to impress on them how important it is to get inside an insured house. Ten years ago, his company sent an agent to investigate a kitchen fire. The well-kept yard and brick exterior was “in a nice subdivision,” he tells the class. “The exterior was maintained properly. You’d think this was the ideal home.” At this point, McConnell says, he asks his agents how many think this is a good property to insure. Everybody raises their hand.

He continues the story: Inside the house, the insurance agent found a very different situation. Literally every room of the house was knee-deep to waist-deep in garbage bags of trash. “Now how many people think this is a great risk?” he asks the class. “Everybody immediately lowers their hands.”

The insurance company alerted police to the problem and, eventually, the home was condemned and the policy cancelled. “If you’d seen all the trash, it was amazing that the whole house didn’t catch on fire,” McConnell says. “Naturally this is an extreme. But over the years, these things pop up more often than you would think.”

Cases of hoarding pop up so often that Fairfax County in Virginia created a hoarding task force in 1998. They consider hoarding to be not only a personal health issue but also a public safety problem, because safety personnel’s’ access in and out of houses can be blocked.

The task force coordinates response among various public agencies when they discover a case of hoarding.

A hidden problem

When a home insurance agent writes your home insurance policy, hoarding may go unnoticed. Insurers usually require an agent (or a vendor) to inspect at least the outside of the home. But that doesn’t always get done. And when it does, the inspection typically covers only the exterior, a practice that misses evidence of hoarding within. Moreover, a homeowner might not begin hoarding until after the policy is written.

The best agents periodically “re-write” their accounts, giving them a chance to visit and inspect homes, says McConnell. But not all do this. Often, a home insurance claim unrelated to the hoarding triggers an inspection that reveals a home filled with hazards. An adjuster who’s called out to inspect roof damage from a fallen tree, for example, may find a yard filled with junked cars and appliances. Or, invited in to inspect water damage from a roof leak, the adjuster may find his way blocked by piles of boxes and garbage.

People hoard pets, too. McConnell sees cases of homes where 20 cats and dogs are living inside and no one cleans up after them. “We’ve seen some real extreme examples,” he says.

From an insurer’s point of view, hoarding is a risk that exposes the company to a variety of potential claims or lawsuits:

• Homeowners or visitors might stumble or trip in the maze of stuff.
• Junk left outdoors can be an “attractive nuisance” to passersby. Even a trespassing stranger who trips over a sharp car part or a child who locks himself in a discarded refrigerator can make a claim against the homeowner’s insurance policy.
• The more trash and flammable materials accumulate in or around a home, the greater the chance a fire can ignite and, once started, spread quickly.
• Hoarding often goes hand-in-hand with broader neglect of the home that can lead to leaks and other problems with the electrical, heating, plumbing and roofing systems. These problems may lead to damage for which the insurer can be held liable.

What home insurance companies can do

There are no official guidelines regarding homeowner hoarding. Each insurance company must decide whether a home full of stuff has become an insurance risk.

Once alerted to a hoarding problem, an insurance company considers whether and how to act. It consults the state’s laws to decide the next step. Each state insurance department has its own rules on how insurers may proceed.

Depending on the severity of the problem, the insurer could cancel the home insurance policy immediately. Or it may try to work with the homeowner to reduce the risk, especially if state law prevents cancellation right away. “In some states, you can’t cancel unless there is an increase in hazard,” says McConnell. If the debris was there when the policy was written, the law may require the insurer to send the household a notice spelling out the problem and warning that it must be cleaned up or the policy will be cancelled.

“If [the homeowners] don’t act on that, then you do have the right to cancel,” says McConnell. Other states require an insurer to wait until the policy’s term is up. The insurer can then decline to renew the policy, citing a “bad exposure” risk.

Who’s to judge your housekeeping?

In another generation, insurers might have cancelled a home insurance policy for what they called “poor housekeeping.” Today, a charge of “poor housekeeping” may not hold up to scrutiny if the customer appeals the policy termination. Insurers are understandably wary of criticizing their clients’ housekeeping.

The home insurance company has the burden of documenting the problem, usually with digital photos. It must be ready to defend its termination of a policy at a state insurance department hearing. “Any time you cancel, you give the insured the right to go to the [state] insurance department and appeal,” McConnell says.

Home insurance cancellation is a tough call, made easier in the case of a clear risk of fire. Otherwise, says McConnell, “the only rule of thumb I’ve given [to agents] is, ‘Would you live in the house?’”

About the author: Marilyn Lewis is a freelance journalist with a background in daily newspapers and online media. She specializes in writing about real estate, personal finance, and technology.

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Monday, October 5th, 2009

Credit is factor in insurance

(The Arizona Republic) Credit issues are in the news these days, and that means insurance can’t be far behind.

It’s common knowledge that credit scores affect consumers’ ability to obtain loans and the interest rates they pay. But scores also help to set premiums for homeowners and auto insurance in Arizona and most other states.

Credit scores are grades that reflect a person’s ability to manage debts over time, based on information in credit reports.

The use of scoring is controversial, but insurers defend the practice. “Numerous studies have determined there is a strong relationship between credit-based insurance scores and risk of loss,” wrote Ron Williams, executive director of the Arizona Insurance Council, in a commentary. “Higher-risk individuals will pay more for auto- and home-insurance coverages (and) lower-risk individuals will pay less.”

Other information such as prior losses and driving records also are used to price policies, but insurers say credit scores provide a clearer picture, helping to set rates more accurately and making coverage more widespread and affordable.

Certain protections exist in Arizona for consumers who are denied credit or who must pay higher premiums because of scoring, Williams noted. For example, insurers must reveal the source of the adverse credit item and tell consumers how to get a copy.

Also, insurers can’t include various types of credit information, according to Williams. These include collection accounts tied to medical debts as well as bankruptcies or liens more than seven years old.

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Monday, September 21st, 2009

THE RELUCTANT LANDLORDS

(The Wall Street Journal) With housing prices still in the dumps, many Americans are finding themselves in the uncomfortable position of landlord.

Some have been forced to relocate for a job and can’t sell their houses. Others have moved, but are holding on to their previous homes, hoping for prices to rebound before selling. Many are finding that rent checks don’t come close to covering their mortgage payments.

Hard data are scant on how many homeowners are renting out their homes, but anecdotal evidence suggests numbers are up. In one indication of the trend: More homeowners are converting their homeowners insurance to landlord policies that cover the additional risks of leasing out a home. Allstate Corp., the second largest home insurer in the U.S., reported a 27% increase in conversions in the first quarter from the previous year.

“The number of rental homes available is greater today than it was a year ago due to the foreclosure crisis,” says Mike Nelson, current president of Rental Home Professionals Inc., a multiple listing service of rental homes owned by the National Association of Residential Property Managers in Chesapeake, Va.

In Frederick, Md., Realtor Jim Bass says that because of rising demand, a couple of months ago his real-estate group started offering property-management services, tending to the rented homes of absent owners. Mr. Bass says a client recently rented out his 4,700-square-foot house after failing to sell his home, which he listed for $790,000. Now a tenant pays $2,995 per month—a shortfall of $2,000 from the $4,995 mortgage payment. The homeowner “feels that two years from now, the market will improve to the point where he can recapture that,” Mr. Bass says.

Experts generally advise against becoming a landlord in hopes of recouping lost home value. In some hard-hit parts of the country, such as Florida, Nevada, Arizona and parts of Ohio, prices may not climb back to mid-2000s levels anytime soon. Landlords have to pony up money each year for property taxes, insurance, maintenance and repairs. Meanwhile, demand for rentals in many parts of the U.S. isn’t strong: Apartment vacancy rates nationally are the highest in more than two decades and rents are falling in some areas, compounding the difficulty of finding a good, steady tenant.

Homeowners who owe more than a house is worth in very depressed areas may be better off selling even in a short sale, whereby the bank agrees to accept less than the full amount owed on the mortgage, says economist Edward Leamer, director of the UCLA Anderson Forecast. Your credit rating takes a serious hit, but, he says, “better to take your losses and move on.”

Kyle Becker, 27 years old, and his wife didn’t feel they had much of a choice in becoming landlords. The couple and their infant son moved from Columbia, Mo., to Winchester, Va., last year so that Mr. Becker could attend pharmacy school at Shenandoah University.

Before they moved, they listed their three bedroom, two-bath ranch-style home in May 2008 for $139,000. They had bought it in 2005 for $110,000 and put $30,000 into roofing and siding. By February, they hadn’t received a single bid.

“We had only seven lookers over the course of a year,” Mr. Becker says. Meanwhile, the couple was paying $1,200 a month in rent for a Virginia house. Last spring, the Beckers finally leased the Missouri house for $675 a month—$225 less than their mortgage payment.

Because the home was no longer owner-occupied, Mr. Becker was unable to refinance his 6.1% mortgage when 30-year rates dipped below 5% briefly.

If he had to do it all over again, Mr. Becker says, he might have chopped the price of his Missouri house, where sales have been stagnant—with the exception of “distressed” properties in some stage of default.

The calculation isn’t the same for all homeowners. Those who have paid off their home or have a small mortgage balance may be able to wait out the market. And there are pockets of the country—Houston is one—where home prices haven’t fallen as hard. Some homeowners may want rental income to supplement retirement savings.

Still, they may be shocked by the costs. Teshika Holmes, 36, says she received no bids for her three-bedroom house in Huntsville, Ala., after a job loss forced her to relocate to Montgomery, Ala. She’s renting it out for about $800 a month.

Ms. Holmes hired a property manager who charges 10% of the rent. Typically rates run from 3% to 12%. She also pays an increased premium of $500 a year for landlord insurance. Among other things, a landlord policy covers the loss of rental income if a fire makes the house uninhabitable. It costs about 25% more than a standard homeowners policy, according to the Insurance Information Institute.

Ms. Holmes says she has negative cash flow each month from her Huntsville house, but the rent allows her to stay current with her mortgage and preserve her good credit. “The only thing I wanted was the house note paid,” she says.

Some homeowners are renting out their homes because they live in areas where a handful of distressed sales have skewed home prices downward. Economists say homeowners who have equity in such homes may be right to delay selling, as sales have started picking up. However, they should be realistic: Sales of lower and moderately priced homes are recovering faster than homes at the upper end, and prices may not rise that much in the short term.

David Richter, of Chicago suburb Wheaton, Ill., says he rented out his home because he was receiving low bids. “There were plenty of lowball bidders,” says Mr. Richter who moved to a smaller home in Wheaton. “We have enough equity that we felt we were better off riding it out.”

Before doing that, homeowners should consider the financial realities. Generally, utilities, maintenance and repairs run higher with tenants than when the owner occupies the house. Collecting enough rent to cover the note on a home purchased at the height of the housing boom may be impossible.

Rental income is taxable, but can be offset with business expenses–including mortgage interest, real-estate taxes and homeowners insurance–and depreciation. Expenses in excess of rental income also can be deducted, up to a limit.

Renting for an extended period can eliminate or diminish the value of capital-gains tax exclusions. Federal tax law requires you to live in the house at least two years of the previous five in order to qualify for the full capital-gains tax exclusion upon sale of $250,000 for a single person or $500,000 for a couple, with some exceptions.

Karen B. McIntyre, 46, a certified financial planner in Lower Gwynedd, Pa., a Philadelphia suburb, says she and her husband have been renting out their former home after they bought a newly built home nearby because of its better location and excellent price. “We may also lose some of the capital gain exclusion, but expect the increased selling price (of the older home) will make up for the decrease in capital gain exclusion.”

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Monday, September 9th, 2009

AZ Passes Law to Verify Auto Insurance

Arizona Gov. Jan Brewer has signed into law a bill designed to reduce the number of uninsured motorists on the road. HB2224 requires that a driver that has a third or subsequent violation within three years for not producing proof of insurance must submit proof of financial responsibility before the person’s drivers license, registration and license plates are reinstated.

Arizona law requires an owner of a motor vehicle in the state provide proof of financial responsibility, and to carry that evidence in the vehicle. Failing to produce such evidence is subject to penalties from $500 to $1,000, depending on whether it is a first, second or subsequent offense. The driver’s license, registration and license plates also can be suspended for three months for the first offense, up to one year for a third or subsequent offense.

The Arizona Agents Alliance, an organization made up of more than 120 independent insurance agencies, commended the signing of the bill, saying it takes “critical steps to reduce the number of uninsured motorists on Arizona’s roads by creating safeguards against habitual offenders gaming the legal system to avoid the requirement of maintaining financial responsibility to drive in this state.”

The new measure gives judges throughout the state the ability to more readily know how many times a person has violated the state’s insurance requirement provisions and requires the penalties already in place to be applied for multiple offenders. It also institutes an additional regular reporting requirement to show compliance with the law for those who get cited three times within a 36 month period for driving without insurance.

Rich Franko, President of the Arizona Agents Alliance, said, “We truly appreciate the Legislature and the Governor coming together to enact a measure that protects the vast majority of law abiding citizens from those who have been able to game the system and avoid compliance with the law until now.”

HB 2224 will become effective on this year’s general effective date of October 1.

Source: Arizona Agents Alliance, Arizona Legislature

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Monday, August 24th, 2009

Safety of elderly behind the wheel improving

PHOENIX (The Arizona Republic / Connie Midey) — Once a week, Ruthie Culver steps into her golf cart and drives the 3 miles or so from her home to Banner Boswell Medical Center in Sun City, where she volunteers.

If it’s raining, she gets behind the wheel of her Buick. Culver is 102, and startling though it may be to find someone her age still driving, there is this: She is not the state’s oldest driver. And this: Older drivers may not be quite the hazard to others that younger drivers imagine them to be, according to a recent national study that yielded unexpected results.

Of the 4.3 million Arizonans with active driver’s licenses, 77 are 100 and older. The oldest is a 105-year-old Phoenix resident. Thirty-nine are men, 38 women.

“I was a little surprised by those numbers,” Cydney DeModica, spokeswoman for the Arizona Department of Transportation’s Motor Vehicle Division, said after a check of the division’s records, “but not because I think they’re necessarily bad drivers. We know people are living longer, healthier lives now.”

If official identification is older drivers’ only wish, they can opt for an Arizona non-driver’s ID card, which DeModica’s 93-year-old mother has. Many, though, no doubt share Culver’s determination to remain independent, and a driver’s license — used or merely tucked away “just in case” — is a symbol. A volunteer at Boswell since she was 96, Culver’s not about to let stormy weather or her age keep her away now. “I hope I can keep driving as long as I keep active and as long as I feel safe,” she said.

Names and other identifying details about license holders are protected by Arizona law (Culver volunteered her driving information), so it’s not known how many of the other 76 centenarian drivers are still on the road, how often or under what circumstances.

All renewed their licenses in person, as required for those 70 and older, DeModica said, “but medical conditions being what they are, 30 of them could be in assisted living or nursing homes by now.” The 105-year-old’s license was renewed most recently in 2005, she said.

In the five-year stretch between renewals mandated for Arizona residents 65 and older, some decide to stop driving and some have that decision made for them. No state imposes an upper age limit for driver’s licenses, according to the Arlington, Va.-based Insurance Institute for Highway Safety, although several states add requirements for seniors.

–MORE—

“It’s indisputable that various impairments set in as we age,” said Anne McCartt, the institute’s senior vice president for research.

Less clear is how to identify people who shouldn’t be driving, she said. Vision tests and certain other measurements so far have not proved sensitive enough to predict risk accurately.

Arizona’s MVD receives thousands of letters a year from drivers’ physicians, family members and responders at accident scenes who report troubling signs of declining driving ability, DeModica said. Those cases are referred to the division’s medical review program, the nation’s first.

“Crash frequency increases at age 70 to 75,” she said. “But driving ability can be compromised at any age and by health conditions like diabetes, stroke or serious head injuries, so we have to have lots of built-in safety nets.”

Arizona residents renewing their license must pass a vision test and fill out a renewal application. The in-person renewals starting at age 70 give MVD employees an opportunity to spot signs of cognitive decline or impaired mobility in applicants and to require road or written tests as needed.

No such signs were noted the last time Culver renewed her license. “I passed everything,” she said. “I was very lucky.” The 5-foot-tall Culver, whose delicately applied eye shadow matches her blue eyes, needs glasses for reading only and never has had cataracts. She takes no medicines and has no chronic health conditions, although her hearing is not as sharp as it used to be.

A widow with no children, she lives alone, has logged more than 1,200 volunteer hours at Boswell, walks with a cane, gardens and gets herself to the library and to bridge games with friends. Has anyone ever told her she’s too old to drive? “The police have never told me that,” she said. “And, knock on wood, I’ve never had an accident.” Culver’s experience reflects a surprising downward trend in injury-causing and fatal crashes among drivers 70 and older, as reported by the Insurance Institute.

A study released by the institute in December revealed that older drivers’ involvement in fatal crashes declined 21 percent from 1997 to 2006. The decline occurred even as the number of older drivers grew 10 percent and their annual mileage increased 29 percent.

However, because they still drive fewer miles annually than younger people do, their fatal crash rate per mile traveled is second only to the youngest drivers, the National Highway Traffic Safety Administration says.

Reasons for the decline aren’t clear, said McCartt, of the Insurance Institute, but may include safety features in newer cars, older drivers’ choosing to limit nighttime driving or make other adjustments, and their improved health, which makes them better able to survive a crash.

Fragility makes older drivers a danger mostly to themselves, she said. Seventy-five percent of those who die in crashes involving drivers 70 and older are the drivers or their older passengers. “A lot of what drives the rates up is not their likelihood to be in a crash,” McCartt said, “but the fact that they’re less likely to survive than younger people in a crash of the same severity.”

Dalvin Palmer, of Sun City West, has taught AARP driving safety courses since 1992 to help improve the odds for older drivers. Palmer, 69, just returned from a 3,500-mile road trip with his wife, encountering nary a problem. “As we get older,” he said, “our reaction times slow, our vision and peripheral vision decrease, our hearing decreases. But a person can compensate for all that with common sense. I know people in their 20s and 30s who I wouldn’t ride across the street with.”

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Monday, August 17th, 2009

Auto Insurance Quotes Much Higher On New Car Insurance:

Cash For Clunkers Downfalls

SAN FRANCISCO, CA (OfficialWire) “Cash for Clunkers” is a very popular program but there are things that you should consider when trading in your older vehicle. Auto insurance rates are generally much higher on newer vehicles. Many consumers are trading in vehicles that they thought where costing them a lot more because the gas mileage wasn’t up to par, but then they are now ending up paying out even more for their auto insurance rates.

Things to consider when trading in your “clunker” for cash:

1) Will your budget be able to adapt to the change in the price of your auto insurance?

2) Will the new car payment be too much for your budget even with the $4,500 government grant?

3) Is the gas mileage really that much better that you would want to risk paying higher automobile insurance?

There are lot of things consumers are not aware of when jumping at the chance to get a newer vehicle. The $4,500 the government will get you sounds nice, but there are thousands of people that do not take into consideration that they might be paying higher auto insurance. The best solution is to compare auto insurance quotes before you rush down to your local dealer with your old car.

Older vehicles might cost a little bit more for gas, but it is very important to consider all aspects that owning a newer vehicle has. There are many people that are using this program and when they go to get new auto insurance, they find out that their car insurance companies are giving them much higher car insurance rates.

When trading in your old vehicle, carefully consider the other factors that come into owning a vehicle. It’s not just the sticker price that will affect you. People all over the United States are seeing the low cost auto insurance jump when they get their new car. New car insurance is many time higher than older car insurance.

Be careful and make sure you compare auto insurance quotes first.

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Monday, August 10th, 2009

Auto Theft Authority jeopardized by cuts of $1M in 2010

Arizona Capitol Times / Josh Coddington – If the latest budget proposal passes, the Arizona Automobile Theft Authority will have to operate without roughly two-thirds of its annual state funding. The Legislature reduces that agency’s budget by $1 million in its fiscal 2010 budget plan.

The first $500,000 was cut as part of a deal brokered among Republicans last week. A few days later, another $500,000 reduction was included the proposal at the request of Sen. Jack Harper, a Republican from Surprise. These reductions come just as it seems the agency is making measurable progress in combating one of the state’s major sources of crime.

Phoenix dropped to 19th in 2008 from eighth in 2007 on the National Insurance Crime Bureau’s list of auto-theft hotspots in the United States. Tucson also tumbled to 13th in 2008 from 10th in 2007.

Authority Interim Director Ann Armstrong said she is concerned about losing funds that help her agency coordinate its efforts throughout as much of the state as possible. “Without those dedicated funds and without a dedicated, coordinated effort by one agency in cooperation with hundreds of law enforcement and criminal justice partners, I really do not believe this effort would be as effective as it is,” she said. “We wouldn’t be seeing the reductions that we’re really starting to see.”

The agency pays a significant portion of the salaries of the members of the Automobile Theft Authority Task Force, which lost eight full-time employees when the agency’s budget was reduced last year, impacting operations in Cochise, Maricopa, Mohave, Pima, Yavapai and Yuma counties. According to a Theft Authority fact sheet, the task force stands to lose five to seven more members with further budget reductions. “(Additional budget cuts) will severely cripple its (task force) efforts. The task force, in addition to doing recoveries and special investigations and operations, they’re also assisting other agencies with vehicle theft cases, they’re doing public education,” said Armstrong. “They’re out there really hitting the auto theft problem from several angles.”

The agency also pays portions of the salaries of prosecutors in several county attorneys’ offices to enable them to focus solely on vehicle theft cases. Cuts in 2008 resulted in attorneys in Cochise, Mohave and Santa Cruz counties not being able to participate in what is called “vertical prosecution,” in which the same attorney stays with the case from start to finish. Armstrong said if the proposed cuts happen in fiscal 2010, the remaining programs in Maricopa, Pima and Pinal counties will also have to be scrapped. “Those prosecutors we fund in county attorney offices are really having an impact with some really harsh jail time and probation time as well as helping educate judges that auto theft is more than just a property crime,” said Armstrong.

Tough times have affected all government-funded agencies, and Armstrong indicated the Authority will do the best with what it has in combating this pervasive problem. “The auto theft authority board had some really difficult decisions to make this year trying to put the funding where resources are needed the most,” Armstrong said. “But really, resources are needed everywhere.”

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