Sunday, September 29, 2013

Insurance Costs Rise Faster Than Wages

Employer sponsored health insurance is the most common type of health coverage in the country. It is something that every employee wants and the contribution towards this coverage, deducted from the worker’s wages, is in most cases seen as a reasonable cost in view of the possible benefits. With health costs still beyond the means of a large part of the population, the need for employer sponsored covered can only grow.

But the cost of this insurance is, in terms of its effect on incomes, is increasing.

Almost Flat Wages

In 2011 the costs of family health insurance coverage increased by 9% and that of individual coverage by 8%. Against this, the rise in the current year over 2012 has been 4% for family coverage and 5% for single coverage. So while the lower increases are good news, the fact that wages have gone up by only 1.8% shows that the cost, to the employee, has gone up. Today, employer sponsored family insurance costs top $16,000.

On top of this, many employers are modifying the health insurance policies to include a higher deductible. This means that the insured will have to pay more for medical tests and treatments before the coverage kicks in. Add this to the growing cost of coverage and the low wage increase and employees are paying significantly more from their own pockets for health insurance.

The more moderate increases in health insurance costs since the end of the recession are the only silver lining in this situation. The Kaiser Family Foundation, a non-profit that has studied the issue sums up the situation it in this way – coverage costs are going up, cost sharing is going up and wages are almost flat. The implications for the family budget are clear. The only positive is that inflation remains low.

It’s Not The Same For All 

Generally speaking the employer covers most of the health insurance costs of an employee, but the actual change in costs and its effect is often felt directly by the employee. There are some lucky workers whose employers absorb health insurance cost increases so the employee contribution remains static. Insurance rates also depend on the type of coverage, the area lived in and the size of the employer. Those working for smaller companies tend to suffer the most from insurance cost increases as the employers do not have the same negotiating leverage as large companies do.

Little Hope Of Relief 

According to America’s Health Insurance Plans (AHIP), the national trade association representing the health insurance industry, more than one sixth of the U.S. economy is directed towards health care spending, but the value received in not anywhere near the $2.7 trillion that is being spent. Up to 30% of this amount -$800 billion – is wasted or used in inefficient or redundant ways. While a great deal of discussion has taken place on the issue, concrete long terms steps to bring the situation under control, Obamacare notwithstanding, are yet to emerge. In other words, the hopes for any short term relief on rising health care costs are slim.

Contact Insurance by Allied Brokers and have your questions answered about how to keep your insurance cost in check.

Friday, September 27, 2013

Property Insurance Mistakes That Could Cost You

The occupancy status of a piece of property often changes. It could be a home that is left empty for an extended period while the family is away or an office that is no longer operational with no one to occupy it. If the property has been insured, it will have been done so with reference to a specific type of occupancy. These would include:
  • Owner Occupied, Primary and Secondary – i.e. Homeowner’s policies
  • Tenant Occupies – Fire, Dwelling and Rental Property policies
  • Course of Construction (COC)
  • Vacant property

Any insurance policy taken on property is conditional on the occupancy status remaining unchanged. If a change occurs and the necessary amendments have not been made to the policy, most or all of coverage may be lost.

What Can Happen And Why

An owner occupied primary residence is the main home of the family which is where they live most of the time. Because the house is in regular use and is not left empty the structure and its contents are thought to be reasonably safe from damage, theft or other forms of loss. Because of this the owner occupied primary residences usully get the best coverage at the best rates.

An owner occupied secondary residence will be a vacation home, a ski cabin or other place where the family spends a part of their time, but which is unoccupied for the large part of the year. These homes are fully furnished, like the primary residences, but since they are left empty for extended periods, the risk factor and chances of loss are greater. Coverage for such residences will cost more than that of the primary. They also usually have less coverage for theft and loss of personal property. In addition there are a few coverage limitations such as that of water damage from freezing pipes etc. In many cases, an insurance company will offer coverage for a secondary residence only if the primary residence is insured with them. What often happens is that a secondary home is used for vacations and also rented out during periods when it will not be owner occupied. If this happens and the insurance policy is a homeowner’s one, it is null and void. The proper insurance for this kind of property, with double use, is that of a rental property which will provide coverage when owner occupied and also when given on rent.

If a property is covered by homeowner’s / rental property insurance and is under Course of Construction the insurance company must be informed within 30 days and a request made to add COC coverage to the policy, If this is not done, a number of coverages such as theft of building materials, wiring, plumbing, appliances and so on may be lost. Construction site theft is increasing across the country because of the rising costs of copper and other material and fittings.

If a home is left vacant for over 30 days and the insurance company not informed and a vacant home policy obtained, the property will not be covered. This is because a vacant home, with all the valuable items inside it, is at high risk in terms of theft. This vacancy can be for a variety of reasons including short term change of residence, awaiting sale, repossession bankruptcy etc. Whatever the reason, a vacant home policy is essential. A vacant home is different from a secondary or vacation home which is classified as unoccupied and not vacant so the polices that apply are different.