The U.S. Supreme Court has declined to hear a case brought by New Orleans property owners who argued their Hurricane Katrina flood damage should be covered despite insurance policy exclusions because the flooding was caused by the failure of the city’s man-made levees. This will uphold rulings from lower courts.

The high court dismissal of the case without comment means a Fifth Circuit Court of Appeals decision in favor of insurance carriers and their exclusions stands for now, but does not mean litigation over the issue of coverage for flooding caused by breached levees is over.

Plaintiffs in the case had contended that because their properties were flooded as a result of the levee breaches, a “man-made act,” the flood exclusions in the policies did not apply. They argued that “the massive inundation of water into the city was the result of the negligent design, construction, and maintenance of the levees and that the policies’ flood exclusions in this context are ambiguous because they do not clearly exclude coverage for an inundation of water induced by negligence.”

The inaction by the U.S. Supreme Court means attention will now turn to the Louisiana Supreme Court, which is scheduled to hear a related case on Feb. 26.

One of the plaintiffs in the appeal to the U.S. Supreme Court, Xavier University, stressed that the U.S. Supreme Court refused to hear a narrow legal issue and did not rule on the substantive claims of plaintiffs.

In a statement, Xavier University in Louisiana said it had asked the Supreme Court to consider whether it was error for the U.S. Fifth Circuit to refuse to certify an issue of Louisiana insurance law to the Louisiana Supreme Court because the Fifth Circuit had recently certified insurance issues to the Texas and Mississippi Supreme Courts.

The Louisiana issue is to be decided after the Louisiana Supreme Court hears arguments on Feb. 26 in the case Sher v. Lafayette Insurance Co.

The final ruling could affect thousands of property owners in the New Orleans area and an estimated $1 billion in insurance payouts.

· Claims occurrences and severity are predictable (outside the occasional hurricane).

· Claims data is readily available and useful.

· Claims data is shared between insurers.

· Claims severity is limited to policy limits (hint: don’t offer high limits to high risk drivers).

· Driver’s data is public information and shared between most states.

· If a driver’s violation and accident history goes from good to bad, the insurer can non-renew the policy or adjust rates to fit the new risk.

· Each state maintains a high-risk pool for ‘uninsurable’ drivers.

· Insurer’s rating tables are public information available through each states DOI.

Health insurance:

· Claims occurrences and severity are unpredictable.

· Claims data is enormous and largely useless.

· Claims data is not shared among insurers (HIPPA rules)

· Policy limits on health policies are usually much higher on heath policies.

· Health information is private. Insurers must accept people unscreened (group policies), by stature (Medicare supplement) or rely on field agent cooperation.

· Health policies are guaranteed renewable or subject to HIPPA; no cancelling bad risks.

· Only a few states mandate a high-risk pool.

· Insurer’s rating tables are private information and not readily available.

Let us make it clearer; for instance, if you go for 20-year term insurance, it is total waste of money if you live more than twenty years! The term for life called as ‘term 100’ means you got to pay a flat premium throughout your life and it is really to be thought that this term 100 generally pays out if you reach age 100 even if you are still on this earth!

Universal life generally comes with minimum premium payment as the term 100. However, you can go for higher premium and the extra amount will be used to go for some investment in the policy. Your family is dependent on you and when you need them to be economically safe, you need insurance policy.

There is no need to replace your income once you retire because by the time you reach that age, your children would be adults and no more dependent on you. Your spouse will be getting your investments and most of your pension and therefore, the need for income replacement goes away as your age advances.

The role of salesperson begins here. They create a ‘need’ of insurance in front of you when you think about your future and income replacements. Generally, main needs usually used are the taxes you have on your estate and when you avoid probate fees. These taxes become problem especially if you have fixed assets and your kids want to keep them. This is because when you give asset to your kid, your estate first needs to pay the capital gains tax, which could be high. In case, if you don’t have any investments, then they can only pay it by selling your own asset.

For almost all people, the main asset is RRSP’s and their houses that their kids won’t keep. In this way, your estate has lots of cash. For instance, if your estate is $1 million and there shall be $200,000 tax when you die, this means your kids get $800,000 instead of $1 million. Here you need to think that is it worth paying life insurance premiums you need to pay for your entire life?

Probate fees are normally from 0.5% to 1.5% and in this calculation; it could be $10000 on your $1 million estate. These rates are of the assets those are passed by the will. You avoid the probate fees because the death benefit passes outside the will since the insurance policy names a beneficiary.

Life insurance premium for minimum universal life is generally at least 1% of the death benefit a year. In this way, you can get 10-20 year term for only about 1/3 the cost. So if you live for two years, you have already wasted more in big premiums as compare to the savings in probate fees.

Overall, universal life insurance makes no sense for your money if you don’t have a need for insurance for your life. If you want to go for it, it is advisable to go for the plan that is cheaper than the term 100. Think twice before investing your money as look at the rates that are offered to you. Check out that whether they are higher than others or not.

A:  First, just because your neighbors are getting new roofs doesn’t mean it’s an entirely due to hail. It can be the age and condition of the roof. For example, your neighbor may have a 25 year old roof with one hail strike. The shingle may not be made any more. That can be grounds for replacement of a whole roof. If you have a new roof, with only one hail strike, it also can be grounds for not having the roof replaced. Furthermore, there could be wind damage, which is an entirely different animal. There can also be building code requirements, such as what’s called a 25% rule*. Finally, insurance companies have different standards. Some companies want 16+ hail strikes per 10X10 area, others want less. Next, the quality of the shingle can matter a lot. A 3-tab vs. a laminate shingle can make a huge difference in hail damage. Finally, shingles are rated for some quantity of hail damage. The thing many insurance companies are concerned of is when the hail actually pierces the matte of the shingle. Many insurance companies do not care that some of the granules were rubbed off (although some do). These standards have been developed by a company called Haag engineering.If you’re really motivated, look at the metal items on your roof, the furnace caps, turret vents, and even the AC fins. These items ALWAYS dent before the shingles. By looking at these items, you can get an idea as to the size of the hail. If the dents are only pea sized up to marble sized, and your roof is in good condition, it’s quite possible you do not have a lot of hail damage; although you may, depending on your shingle type, age and quantity of hail.

If looking at your own property, and not your neighbors, you actually have hail damage; nicely ask for the adjuster to come back out. If that doesn’t work, offer to send in photographs of the damage to your vents, and examples of where hail strikes have actually pierced your shingles.

Finally, if they still won’t send someone, grab your policy and look for a section called Appraisal. It explains what to do if you and the insurance company disagree. Sending letters to the state insurance commissioner generally doesn’t help unless you’ve exhausted all options in your insurance policy.

It can be very difficult to see hail damage. Generally, you are looking for missing granules and gouges in the shingle. If you see a little round spot with granules missing, it may be hail, but you need to look at what the granules surrounding the hole are doing. If the granules are coming up above the surface of the surface of the shingle, it’s called a blister, and is not hail related.

This applies to residential property with 1 - 4 units and no commercial exposure (no apartments on top of stores or houses used for a public access business). Any property with 5 or more units is considered commercial coverage.

A standard policy has four parts:

1. Declarations - Insurance company name, name of insured, address of property, amount of coverage, premium, and policy period.
2. Insuring Agreement - Contains consideration clause, effective time & location, policy limits, ACV limitations, company options, direct vs indirect losses, insurable interests and perils covered.
3. Conditions - Conditions that apply to insurer and insured; an example would be insured requirements to notify insurer of loss.
4. Exclusions - What’s not covered. Flood, war, nuclear, earthquakes and wear & tear (including insect & animal damage) are general exclusions that apply to all policies.

The policy is broken into the base policy (called a standard fire policy or SFP) and a Dwelling Form endorsement (Def. an endorsement is an addition to a Property & Casualty policy that adds more coverage; called a rider if it’s Life & Health related). The SFP covers basics like fire & lightning. Additional loss coverage depends on which endorsement you buy:

1. DP-1 endorsement - Basic Form or DP-1 - Pays ACV (replacement cost minus depreciation) coverage (replacement cost may be available for extra $$) Named coverages are: Wind, Hail, Aircraft, Riot & Civil commotion, Vehicle, Volcano, Explosion & Smoke. DP-1 policies are generally only sold on vacant property (under renovation or for sale) SO another important endorsement is vandalism and malicious mischief (VMM). May not cover trees and scrubs.
2. DP-2 endorsement - Broad form, Includes all coverages on DP-1 plus replacement cost on structure, burglary damage, falling objects, weight of snow & ice, water leakage, freezing pipes, power surge and glass. VMM is included without an endorsement. Usually includes trees and scrubs up to $500 per plant.
3. DP-3 endorsement - All risks -includes all coverages in DP-2 and generally covers anything not excluded. Theft only applies to build in items.

To determine what your coverage is, read your policy (it’s a thumping good read..for an insurance geek) or look at your declarations page. If it’s still not clear, discuss with your insurance agent or call customer service at your insurance company. Be sure to press for details, since your agent may not know what he’s selling.

The policy will pay up to a certain amount of money for the above mentioned losses based on your declarations page:

Deductible - Usually $500 to $1000, amount property owner is to pay before losses are paid.

Coverage A: Dwelling- the building itself including all structures and fixtures attached to the property. May be replacement cost or ACV. Usually contains an inflation provision so coverage (and premium) go up a certain percentage every year on the policy anniversary date. Determining proper replacement cost is a discussion for another day.

Coverage B - Other structures - Outbuildings or unattached items (like fences). Usually 10% of Coverage A. Pays in addition to Coverage A, so on a total loss, if you have $100,000 of Coverage A you would receive up to an additional $10,000 under coverage B.

Coverage C - Personal property - Again a percentage of Coverage A: This tends to vary by insurance company. This is limited to the owners personal property at a rental house, not the tenants things.

Coverage D - Loss of Rents. Usually 10% of Coverage A. Covers fair market rent for up to a year or whatever period the insurer thinks is needed to repair property.

Liability Coverage Sometimes called Coverage E - Usually between $100,000 to $500,000 of coverage. Coverage for owners to pay $$ for negligent acts that caused bodily injury or property damage related to owning the property.

Med Pay - Sometimes called Coverage F -Provides small amounts of medical coverage so injured parties don’t need to sue for liability coverage to get minor injuries paid for.

Other coverage included (read your policy to see if they’re included):

Board up and securing property after loss.

Debris removal - certain limits may apply, such as removal of fallen trees.

Fire department service charges -typically around $500 is covered.

Coverages for code compliance - extra $$ paid to bring older properties up to current code. For example the asbestos shingles or fire breaks.

Bottom line: Be careful what you buy and get enough covereage so you’re not owner of a burnt down structure.

Considering that situations change, your prior designated beneficiaries might not be the people you want to receive your life insurance proceeds or retirement money. Some things to consider according to an article on Lancaster Online are:

“When you started work, were you married? Did you name your mother as beneficiary of group life insurance provided by your employer?

How many children did you have when you bought an annuity? Did you name the children individually? If you did, children born after that date would not be beneficiaries.

Do you really want minor children to be named as beneficiaries so that a court-appointed guardian has to be named to accept the money for them? All of these questions should be addressed as part of your estate-planning process.”

Another important aspect is designating minors as a beneficiary. You should consult with an estate-planning attorney about this matter because according to the article “Don’t name minors as beneficiaries of any contractual benefit. If you die while they are still minors, they will not be able to access the benefit without the expensive and burdensome procedure of having a court-appointed guardian.”

Furthermore according to the article “You may use language in your beneficiary designation to allow your executor to name a custodian of the estate of any minor beneficiaries, thereby avoiding a court appointed guardian. It can take more than 50 words to state it correctly.”

Taking out life insurance or opening a retirement is just one-step n the planning process. Assigning beneficiaries and keep those designations up to date is a critical part of the process. To learn more about being a beneficiary check out the book “The Inheritors Handbook”.

Health Maintenance Organizations (HMOs)

• Usually have the lowest premiums and lower annual deductibles. In return, you must submit to various cost-saving restrictions.
• You must get care from providers in your HMO network. You can’t use a doctor from outside the network unless in some special case it is explicitly approved (unless you pay for it yourself).
• You must find a primary care physician (PCP) who acts as a gatekeeper to other (in-network) specialists. For instance, your PCP decides if you need to see a cardiologist, dermatologist, urologist, whatever. Although this is designed to limit unneeded care, it can also be frustrating if you disagree with your PCP. It also underscores the importance of finding a good PCP.
• Often have less paperwork and forms to fill out.
• You are still covered for emergencies at whatever hospital can best provide care at the time, although they may transfer you shortly afterwards to an in-network hospital.

Preferred Provider Organizations (PPOs)

• Usually have higher premiums and higher annual deductibles than HMOs. In exchange it offers more flexibility.
• You can see any doctor, but the costs for you are lower if you see an in-network provider vs. an out-of-network provider. In-network doctors have agreed to a discounted fee schedule for people in the PPO, essentially providing a bulk discount. This is the PPO method of limiting costs.
• Even if you disagree with your PCP, you can still go to whoever you want (in-network or not).

Understanding what you’ll need in terms of supporting information is also crucial because you’ll want to collect it as it happens. Need a police report? Get a copy right there instead of finding out you need it later and then requesting it from a backlogged police department.

Finally, learning something when you’re not stressed out is always better than trying to learn it after a calamity.

Instead, small claims — the ones that are not particularly catastrophic — are disproportionately expensive for an insurer to process. This is because smaller claims bear the same administrative costs as large ones. “Companies have to staff a call center to answer the phone when people call, they have to have adjusters ready and they have to have people reviewing all of the claims to make sure they are legitimate,” says Braun.

Smaller claims are also more expensive if they happen frequently. “If a claim was made because lightning struck a house, the likelihood of (lightning striking twice) would be small. It would probably not deter a competing insurance company from offering a competitive quote on that house,” says Young. “But if that house had a series of burglaries, it could deter an insurance company.” Premiums would likely increase substantially unless the homeowner could prove that significant protective devices were installed to reduce the chance of loss, she adds.

Question: I recently booked a vacation trip to Cabo San Lucas, Mexico. Because I was visiting during hurricane season, I also bought travel insurance through Access America.

Five days before buying my trip, I had my annual physical exam. After I booked my vacation, my doctor phoned me and asked me to come back for a consultation. I was diagnosed with prostate cancer, and several weeks later, my doctor advised me to cancel my vacation.

I submitted a claim to my travel-insurance company. It was denied because the company claims I exhibited symptoms on my visit to my doctor before booking my vacation.

I told the insurer that I had medical records that indicate I had no knowledge of a possible illness when I visited my doctor. The insurer and its consumer advocate say that I don’t have to have knowledge of the symptom — the policy only requires that I have a symptom.

According to the travel insurance expert, every major travel-insurance company has a clause that lets it off the hook for a pre-existing medical condition. The question you have to consider is whether your individual diagnosis qualifies for this “pre-existing” medical condition?

Looking at Access America’s definition, a pre-existing condition is “any injury occurring prior to and including the effective date” of your policy and “any illness occurring during the 120 days prior to and including the effective date of this insurance for which treatment by a licensed physician has been sought or advised or for which symptoms exist which would cause a prudent person to seek diagnosis, care or treatment.”

In this case, the patient was able to get the situation resolved because the test results weren’t available until after the vacation had been booked. But when you’re filing a claim on your travel insurance, it’s important to first look at your policy to see what is and isn’t covered, and to offer the records that will allow the insurer to honor your claim. Always read the fine print.