Pay less now or pay more later. Flood insurance rates to increase as of Sept. 11 when new maps go into effect

Five Towns residents only have three weeks to take advantage of cheaper, grandfathered in rates on flood insurance which will only be available before the new flood map take effect on Sept. 11, said a Federal Emergency Management Agency (FEMA) official.

“Flood elevation is up by four feet,” said Richard Einhorn, of both FEMA and the Department of Homeland Security. “If you have a mortgage, the bank will require you to get flood insurance. Buy flood insurance before the new maps go in. If you wait too long, there's a possibility your bank will call you, and you'll be out of luck for grandfathering.”

Some 27,000 homes in Nassau County are being added to the flood plan when the new map goes into effect. Einhorn encouraged all residents to look up their flood risk online at www.floodsmart.gov, as well as check the new flood map to see whether their area is affected by the changes. He added that the Web site will give you the names of the closest flood insurance agents to your home.

“It's the difference between paying wholesale and resale,” said Monte Rosenzweig, an insurance agent with Gold Standard Agency Inc. in Woodmere. “If you purchase insurance now, you're going to save thousands of dollars.” He added that flood insurance is transferrable to a future owner of a property, so investing in insurance now can save someone money for years.

Residents should check whether the new flood map affects them, Rosenzweig said. “If the zone of your home changes, you're making a tremendous mistake by not buying flood insurance right now.”

Some manufactured home owners get bad news from State Farm

Jack Spikes loves the view from the back porch of his manufactured home on the bank of the Chattahoochee River near Columbia.

The flow of the lazy river is peaceful, calm. He remembers seeing alligators in the river and coyotes near the home, as well as other wildlife. It’s why he made his vacation getaway a permanent residence several years ago.

“This was once the best kept secret in the Wiregrass,” Spikes said.

But Spikes can take a walk off his back porch and point to the watermark that still exists on a nearby structure almost 20 years after the Chattahoochee left its banks and flooded the area. He can point to another place where the water rose in 1995.

Spikes said he remembers filing insurance claims on the flood, included as a part of his regular homeowner’s policy.

“And they paid, right away,” he said.

Last month, however, Spikes received a letter from State Farm which said changes were being made to all manufactured home policies in the state. Flood insurance would no longer be included in the regular homeowner’s policy. Spikes said he was offered a separate flood insurance policy for $2,500 a year.

“That’s more than I can pay,” Spikes said.

Local State Farm agent Don Thompson said the changes were a simple matter of profit and loss. He said State Farm was one of the few agencies that had continued to offer the flood coverage at no extra cost, and could not afford to include it any longer.

“We had been paying thousands of flood claims without collecting the proper premiums,” Thompson said. “Just couldn’t give it away anymore.”

Thompson said the changes affected several of his clients around the Chattahoochee and Lake Eufaula.

“Most of them understood,” Thompson said.

But $2,500 is too steep for Spikes. He said he plans to take his chances.

“The Corps of Engineers has done a real good job of controlling the flow. It hasn’t flooded in a long time,” he said.

“But you never know.”

The insurance co-op is already in your neighborhood

It's like a good neighbor -- and State Farm Insurance is probably American's most successful and best-known member-owned cooperative.

Whether the government could replicate its success by creating health care co-ops is far from certain -- and highly unlikely.

"When the Senate says we are going to have a co-op, what they are really saying is we are going to have a government-run program that will remain so until the government decides to turn it over to members," said Michael Cannon, a health care policy expert at the Cato Institute. "There is a lot of reason to doubt."

Barry Manilow reportedly wrote the schmaltzy jingle the insurance giant uses to this day. The company was founded in 1922 by a retired farmer and insurance salesman who started his own company with a couple of friends. Some modern advocates of creating a co-op system for health care have cited the State Farm example as a workable model. The company says it serves more than 75 million policies in North America, according to its Web site. At the end of each year, the company turns profits over to policy holders -- more than $1 billion in 2007.

Barry Manilow reportedly wrote the schmaltzy jingle the insurance giant uses to this day. The company was founded in 1922 by a retired farmer and insurance salesman who started his own company with a couple of friends. Some modern advocates of creating a co-op system for health care have cited the State Farm example as a workable model. The company says it serves more than 75 million policies in North America, according to its Web site. At the end of each year, the company turns profits over to policy holders -- more than $1 billion in 2007.

But the practical realities of creating a cooperative of any size are staggering and do not easily translate to the current health care debate.

A group health cooperative, as loosely envisioned by advocates in Congress and elsewhere, would comprise stakeholder members enrolling voluntarily who would pick policies, managers and more.

Shifting a group into a newly created health cooperative would take time, money, organization, assistance and significant government oversight. It's not even clear how long it would take for co-ops to get up and running, or if members would experience a gap in coverage in the meantime.

Lawmakers have said health co-ops could be eligible for a portion of about $6 billion that could be set aside as startup funds -- another significant departure from the private insurance company model.

Cannon said there would be significant disincentives for the government to cut ties with health co-ops and turn them over entirely to members.

"It would mean the politicians could keep handing out the goodies to constituents like doctors and other providers, and could wield more influence," Cannon said.

State Farm to raise homeowners insurance rates as much as 14 percent in Dallas area

AUSTIN – State Farm Insurance filed notice with the state Wednesday that it will raise its homeowner policies as much as 14.4 percent in the Dallas area, becoming the third and largest insurer to hike rates in the past month.

State Farm officials blamed the boost on a slew of spring storms unleashing hail damage in North Texas, as well as the rising price of building materials. Statewide, the rate increase averages about 8.5 percent, with the new rates hitting existing customers when they renew policies after Oct. 1. New customers will pay the higher rates starting Sept. 1.

The spike in premium costs also follows the devastation wreaked by Hurricanes Dolly and Ike last year.

Mark Hanna of the Insurance Council of Texas, an industry group, said Ike in particular was devastating, causing $10 billion in insurance losses.

"It was the costliest storm in state history," Hanna said. Rates had been stable for about six years, he said, but "then Ike kicked us over the edge."

Consumer groups said the jumps follow years of fat profits for insurance companies in Texas.

"The reality is that the rates homeowners have been paying have already been deemed to be too high and the coverage has been significantly less. So in truth, homeowners are paying more for their insurance and getting less," said Alex Winslow, executive director of Texas Watch.

He said he wasn't surprised by State Farm's decision after seeing Farmers Insurance recently announce an average statewide hike in its rates of 10 percent to 12.6 percent, followed by Allstate's 6.2 percent increase last week. They are the state's three largest insurers; State Farm alone has 1.2 million homeowners and rental insurance companies.

"I was waiting to see State Farm fill out the trifecta," Winslow said.

He said he believes insurance companies were "emboldened" after the Legislature adjourned this year without tackling insurance regulations.

Insurers can file their rate increases with the Texas Department of Insurance and immediately apply them to policies. The department then studies the rates to ensure they can be justified by actuarial data. If not, the agency can order refunds and rate rollbacks.

But State Farm has been legally challenging a rebate ordered six years ago, saying its rates always have been fair and competitive and they do not owe consumers a rebate. The case, which is awaiting a ruling from Insurance Commissioner Mike Geeslin, could cost the company as much as $1 billion. And it's one of the reasons lawmakers debated changing the system to require prior state approval of insurance rates.

The spate of premium increases is spilling into the political arena, especially in the Republican governor's race.

Landlord rules 101: Get the right insurance policy

If you are having trouble selling your home, maybe it's time to think landlord.

A growing number of homeowners who need to relocate for a job or other reason are renting out their homes instead of selling them so they can wait until the market improves. At the same time, investors are taking advantage of low prices to buy rental properties.

Allstate has seen a 27 percent increase in the number of homeowners who switched their insurance policies to landlord policies, compared with year-ago figures. Travelers also said they're seeing a similar increase. So is State Farm Insurance, but less so.

"When you become a landlord, your property goes from a residence to a place of business," says Julie Parsons, vice president of consumer household at Allstate.

That requires a landlord insurance policy, which covers the property and your exposure if anyone gets hurt in it.

These typically cover the building in case it's damaged or destroyed by fire, lightning, wind, hail, cars or collapse from ice, snow or sleet. It also covers the landlord's personal property used by the tenant or used to maintain the house. This could include appliances and landscaping machinery like snow blowers and lawnmowers.

Landlord policies don't include any protection against flooding or offer compensation for damage to renter property. And depending on the how extensive the coverage is, it might also exclude damage from sewer backup, earthquake, vandalism and theft.

Allstate's average annual premium for a basic landlord policy package is $650, but costs can vary widely depending on the state, the amount of insurance and the deductible. Insurance companies also take into account building costs, neighborhood crime, square footage, as well as features like pools and fireplaces, and credit history.

To get a discounted price, some insurers offer an umbrella policy that combines other insurance, like car and homeowner's insurance, with the landlord policy.

More important, the coverage helps protect you from liability if someone gets hurt on your property. Some policies also pay for some or all of your legal expenses. It also will pay for some or all the medical expenses for people injured on the property if the landlord is found responsible.

Unlike a homeowner's policy, the landlord policy also will compensate for lost rent if the building is uninhabitable because of damage that is covered by the insurance. This is a big deal for a landlord who relies solely on that income, especially if a building is under repairs for a long time.

"What if you need to rebuild the building? What about that income?" says Ed Charlebois, vice president of personal lines at Travelers.

Landlords can add on other options, for a price, to either increase how much money an insurance company will pay out or to expand coverage to certain events.

For example, a landlord may want protection from burglary or vandalism. Or, he may want to insure against building code violations and fire department charges. Some companies allow you to insure specific property like satellite dishes.

Like homeowner's insurance, landlord policies don't include any protection against flooding. That coverage is available through the National Flood Insurance Program. It includes building coverage with personal property coverage as an option.

While flood coverage can be expensive in high flood zones, it could help offset a huge hit to your finances if your property is flooded. The average flood claim totaled more than $33,000 over the past 10 years, according to the government, and just a few inches of water can cause damage costing thousands of dollars. And most mortgage lenders require flood protection if you live in a high flood zone.

Renters also can get their own flood insurance from the National Flood Insurance Program to protect their personal belongings. Landlords may want to recommend tenants to buy that and their own renter's insurance since landlord policies don't cover a renter's property. Some of the large national apartment owners require their tenants to buy renter's insurance.

To head off any disputes with your insurance company if you need to file a claim, have dated photos of your property, both inside and out, to show its condition before any damage.

Also, make your property safer by regularly inspecting it for any hazards like cracked or uneven sidewalks, broken handrails and burned out light bulbs, State Farm recommends. Make repairs quickly and make sure your renters have the numbers for repair and service companies to address any maintenance problems if you're not around. If you're an out-of-town landlord, you may want to hire a property manager to deal with these problems promptly.