Assignment of Benefits: A sign of a scam?

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They make it sound so simple. You have a sudden water leak in your house. You call a plumber who makes an emergency repair. He tells you there is water damage because it was a sneaky leak that went undetected for long enough to mess with pipes or cabinets or kitchen tile – or the balance of the cosmos. “Let me call my buddy,” he says. “He handles the dry-out process so you won’t have more troubles. Sign this form that transfers your insurance claim, we’ll get you a lawyer to work with your insurance company. Don’t have to worry about a thing.” This is the point at which you should commence to worry.

Signing over your insurance claim means you’ve agreed to step away and let a stranger handle things. And, you may have NO idea what goes on behind the scenes. Here’s a peek: The plumber got a nice referral fee for inviting the water dry-out company to your house, and that guy got money for looping the building contractor in, who also brought in a friend to handle the carpentry, and the attorney figures out a way to file a lawsuit …. Get the picture? You’ve heard the phrase, “Too many cooks spoil the soup.” What do you think too many non-essential people do to the cost of an insurance claim? And, when hundreds of people are roped into this type of scenario, what do you think happens to the cost of homeowners insurance? Yes, easy questions.

The cost of insurance is the cost of claims. Claims go up, insurance goes up. The Consumer Protection Coalition has a number of resources to explain this phenomena called Assignment of Benefits (AOB). Florida insurers have been trying to rein in the practice for a couple of years. There are a couple of bills circulating in the Legislature. Interestingly – or maybe predictably – other states don’t seem to have this as an issue. That tells you something.

Look at the water claims data from Citizens Property Insurance. Their analysis shows that the frequency of water damage claims is up by 45 percent from 2010 to 2014. And, the average cost of each claim rose by 43 percent over that time frame. No, water leaking from pipes has not become over 40 percent more forceful in that four-year time-frame.

Plugging that leak is what the AOB issue is about.

Deadly mixture: natural disasters and cars

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We feel safe in our cars, right? That might explain why people do very dumb things wrapped in that cocoon of metal, or else road rage wouldn’t exist. But natural disasters give no respect to vehicles. The worst place to be is in your car during a flood, tornado or hurricane.

Last week, I was in the Dallas area, assisting with the insurance industry response to the tornadoes that struck Garland and Rowlett, Texas. Of the 11 fatalities associated with the storm, eight of the victims were in their cars. It is very likely they did not have a clue that a tornado was approaching. It was dark, so they could not see the changes on the horizon. And, if they did not have the radio on or did not have a weather alert app, they were unaware of the approaching storm.

In Florida, we are accustomed to getting a five- to seven-days’ notice that a tropical storm is possible. But with tornadoes, there is only about 13 minutes of average warning time. Turning your smart phone into a warning system is super smart.

Need a no-risk gift? Hot idea is fire extinguisher!

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The quest for the Perfect Holiday Gift can be daunting, especially if you waited this long to start the hunt. Other than giving a loved one cash (which always seems a perfect fit….), giving the gift of safety is an equally safe bet.

This is Home-Cooked Meal Season, Candle-Lighting Season and Keeping the Home Fires Burning Season. So, it is also House Fire Season. Add a live Christmas tree and evergreen-scented candles to the mix, and it’s ever more volatile. Live Christmas trees are easily ignited, serving as kindling for fires that may start elsewhere. December is peak time for home candle fires as well, with many holiday decorations being highly flammable.

Go ahead. Let them label you the Practical Gift Giver. Buy a fire extinguisher. The cook won’t be insulted if you explain your honorable intention was to ensure the house is intact for the next sumptuous meal. While you’re at it, as an extra gift, replace the batteries in your host’s smoke alarm. Or better yet, buy a couple of new ones. The National Fire Protection Association recommends replacing smoke detectors every 10 years.

Homes are being built with more fire-resistant materials, but what’s inside counts. Fire losses are one thing you can control, any time of year.

Towing trouble on Thanksgiving? No thanks!

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National Overeating Day (aka Thanksgiving) is coming up, and a road trip to the annual food fest is part of the plan for many people. Long-distance holiday travel on Thanksgiving Day increases by 54 percent, according to the U.S. Department of Transportation. The anticipation of getting to the table may be half the fun. But what happens if your car breaks down along the way? Besides being late for dinner, you could wind up with a hefty towing bill if you didn’t plan ahead.

Think you own the road? So do deer and other critters

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Animals can’t read traffic signs, and some humans don’t bother. Caution signs alerting drivers to animal crossings dot highways across the U.S. But deer refuse to be corralled into using designated crosswalks, so the open highway is wide open to them. Deer cross wherever they want, and sometimes they choose to do so just as a hapless driver speeds along.  November is the peak of deer mating season, prime time for deer-car collisions. Be careful out there, especially if you are planning a trip north because our neighboring states have more deer crashes than Florida. 

Don’t test your insurance on a test drive

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Be extra careful whenever you test drive a new or used car. If you’re not working with a reputable car dealer, driving that car could be costly if you have a car crash.