I get asked a lot, “Why are insurance rates so high?”  Arson is one reason. To explain insurance in its simplest form, an insurance company collects money from a pool of people. Within that pool all of the insured people there is an agreement. If something bad happens to one of us we are allowed to pull from the money we all put in.

The problem is when there are more claims then money. At that point the insurance company has to raise premiums so there isn’t a short-fall in the pool of money. Insurance fraud, arson and other unethical behavior forces rates higher for everyone.

This is clearly a huge problem in Detroit and the police, fire department and insurance companies are now fighting back. In this Detroit News article you can read about a new program aimed at fighting back against arson.

Marty O’Neill, Insurance Agent

Ferndale, MI

Insurers declare war on arsons in Detroit

$1M pledged to fight rising number of torched homes

Santiago Esparza / The Detroit News

Detroit — A coalition of insurance companies has vowed to snuff out arson in Wayne County and pledged to pay for two investigators and an assistant prosecutor to attack the problem.

Half of all fires in the county and 10 percent in the state are labeled arson or suspicious, according to the Michigan Insurance Fraud Awareness Coalition. So the coalition plans to sink $1 million into a two-year pilot program that begins Jan. 1.

The initiative is believed to be one of the first of its kind in the nation, coalition spokeswoman Lori Conarton said. About $140,000 has been raised through donations for the program since September.

The announcement comes after there were 11 arsons reported Sunday in the city within 90 minutes on six streets on Detroit’s east side and comes as Wayne County and Detroit remain at the center of the national foreclosure crisis. Wayne County Prosecutor Kym Worthy welcomes the help because the county does not have the resources to make fighting arson a higher priority, she said. “People can come into Wayne County and have a pretty good chance of getting away with it,” Worthy said of arsonists during a press conference Tuesday announcing the program. “That is what we want to stop.”

Brian Peppler, board president of the Michigan Association of Prosecuting Attorneys, said the private funding would have to be closely monitored to ensure it is being used properly, just like federal grants that are earmarked for specific purposes. He said clear boundaries would have to be established by Worthy.

“It is a sad day when we have private people come through and fund basic services that the government is supposed to provide,” said Peppler, the Chippewa County prosecutor.

The coalition has pledges from insurance companies and businesses to cover the money, said Patricia Parr-Armelagos, a State Farm insurance agent.

While other anti-crime Michigan programs such as HEAT, which tries to reduce auto theft, and Crimestoppers, which seeks tips to solve crimes, rely on donations, none fund public positions. In the Wayne County insurance program, the investigators and assistant prosecutor would report to Worthy’s office.

Arson cases soar

Stopping the arson will be no easy task.

There were 6,486 arsons investigated by the Detroit Fire Department’s Arson Squad in 2008. That is a 27.8 percent increase over the squad’s 5,074 cases in 2004, said Gery Victor, the squad’s chief. In addition, arson-related insurance fraud in Detroit is up roughly 40 percent from 2005 to 2008, he said.

In 2008, the Detroit Fire Department said the city had about 18 arsons or suspicious fires daily. Detroit has the most arsons of any community in the county, the coalition said. Outside Detroit, suspicious property fires in Michigan jumped nearly 50 percent between 2006 and 2008, reaching 4,895, or more than 13 suspected arsons a day.

Of Michigan’s 83 counties, 70 have seen arson rise, according to the state fire marshal’s office. The insurance coalition said the economy has caused some to turn to arson to avoid foreclosure.

“This is something that is of concern to us and that we are taking very seriously,” Detroit Police Chief Warren Evans said in a statement. “We will be stepping up uniform and plainclothes patrols and surveillance in that area.”

There were about 101,000 vacant housing units in Detroit in 2008, more than double the number in 2000, according to the U.S. Census Bureau.

After the Sunday arson spike, officials said they are particularly concerned about Angels’ and Halloween nights, which had high levels of arsons in the 1980s. City officials are already requesting patrol volunteers.

In 1984, fires on the day before Halloween, for years known as Devil’s Night, peaked when 810 fires were set within a three-day period.

As the city has been plagued with foreclosures and an unemployment rate above 28 percent, fire officials have said that some despairing owners are risking prison to get out of debt, and vacant, foreclosed homes are being torched.

Many arsons are insurance scams that drive up the cost of premiums from $200 to $300 a year in Michigan, said Pete Kuhnmuench, executive director of the Insurance Institute of Michigan and a coalition member.

Some people burn down their property and lie about doing it to collect on insurance policies, which is a criminal act of fraud, coalition members said.

The crime costs policyholders in the state $3 billion a year in Michigan, he said.

“We all pay for insurance fraud,” Kuhnmuench said. “It really is picking the pockets of our Michigan insurance holders.”

Burned homes take toll

John George, founder of Motor City Blight Busters, said the real toll is the effect of living among burned out husks of houses, especially as it pertains to young people. “Quite frankly, allowing children to grow up in and around this kind of negative energy is child abuse,” he said. “We are warping their sense of self-worth. We must come together and do a better job because we are failing our kids.”

George’s nonprofit has helped to tear down 300 such homes, rebuild 300 others and build 300 more in place of ones torn down.

For the arson squad in Detroit, a key component to solving arsons is getting patrols formed year-round, not just as Angels’ Night nears, Victor said. “It is about the volunteers,” Victor said. “We really need the citizens to be involved.”

Worthy said five assistant prosecutors recently attended a training session conducted by the coalition about arson. Three of them have indicated they want the anti-arson position, she said.

“There is going to be a competition for this prestigious job,” she said.

Follow this link:

http://www.facebook.com/home.php#/pages/Ferndale-MI/Marty-ONeill-State-Farm-Insurance/172973429135?ref=nf

Thank you,

Marty O’Neill, Insurance Agent

Ferndale, Michigan

High winds came through the Detroit area this week, knocking out power in several thousand homes in the area. It got me to thinking about some of the claims I have had in my agency. See if you know the answers to these claims questions:

A house in Ferndale has a huge tree. A big wind blows a branch off the tree that crashes on a neighbor’s garage. Whose insurance pays for the damage?

If that same branch hits the neighbor’s car, whose insurance pays and is it the auto insurance or home insurance that provides coverage?

If that same branch crashes through a window and rain water damages the TV, is that covered by homeowner’s insurance?

What if a power outage knocks out the refrigerator and $1500 in food is ruined? Does homeowner’s insurance cover that?

The good news is that you don’t need to know the answers to a single one of these answers, because I know the answers.

Give me a call at (248) 542-7770 or e-mail to marty@ferndaleagency.com and I will give you answers and a free review of your current policies.

Check back for more trivia.

Marty O’Neill, Insurance Agent

Ferndale, MI

The debate of rating auto insurance in Ferndale, and around Michigan, is a very hot topic. Most major insurance companies use a client’s credit score as an aspect in determining risk and, in turn, premiums. Many consumer advocate groups and Michigan’s head Automobile and Home Insurance Consumer Advocate feel that using credit reports is an unfair factor in determining the likelihood of an insurance claim.

Today the AP reported that this case is going to the Michigan Supreme Court. Check back to Ferndaleinsurance.com as this develops.

Marty O’Neill, Insurance Agent

Ferndale, Michigan

Associated Press

Lansing — The Michigan Supreme Court is considering whether insurance companies can use customers’ credit scores to set home and auto premiums.

The high court will hear oral arguments Wednesday morning.

The state insurance commissioner banned credit-based insurance rates in 2005 after calling the practice unfair, discriminatory and unreliable. A county judge blocked the ban. But the Michigan Court of Appeals reversed the ruling last year.

Most large insurers in Michigan use some form of credit scoring to give premium discounts. Generally, the better one’s credit score, the lower a customer’s insurance premium will be.

Insurers are still using credit scores pending the outcome of the appeal to the Supreme Court.

My Ferndale Insurance Agency is right on Woodward in Ferndale. Therefore, I get to see a lot of cars and drivers. I have seen my share of knee drives, drive-and-read people and we are all hearing about the legislation to ban texting in the car (why that should even need to be a law is crazy…it seems obvious doesn’t it?).

As an Insurance Agent I am all for safety. However, this article in the October 7, 2009 Detroit Free Press even caught me off guard. I didn’t even know this was a law.

So fans of fuzzy dice, graduation tassels and pine tree air fresheners rejoice. It looks like you can have your rear view mirror back.

Marty O’Neill, Insurance Agent

State may lift ban on hanging objects from rearview mirrors

BY MATT HELMS
FREE PRESS STAFF WRITER

Michigan drivers may soon be able to hang air fresheners and other unobtrusive items from their rearview mirrors without fear of getting a ticket.

The Senate Transportation Committee passed a bill Tuesday that would end the state’s ban on dangling anything from rearview mirrors. The proposal would leave wiggle room in the law, allowing police to cite drivers with obvious obstructions, but permitting items such as rosaries if they don’t block a driver’s view.

The bill’s sponsor said the state’s blanket ban leads to selective enforcement.

“If you go down the road, about every fourth car has something hanging from its mirror,” Sen. Ron Jelinek, R-Three Oaks, said Tuesday. “Why would you pick one car to stop and let 100 go by?”

The State Police opposes ditching the ban outright.

“If you remove the ban completely, essentially anything goes,” said trooper Chris Hawkins, legislative liaison for the State Police. “You could hang an 8×10 photo from your rearview mirror, and we would have no mechanism for enforcing that.”

The proposal doesn’t spell out the specific size or type of items that wouldn’t be permitted. So it’s not clear whether things such as handicap-parking placards — which advise users to remove before driving — would be considered an obstruction.

That decision would be up to police, said Gabe Basso, legislative aide for Sen. Jud Gilbert, R-Algonac, the transportation committee chairman.

Basso said the bill’s prospects in the Legislature are good. Gov. Jennifer Granholm’s office said she supports the measure.

Jason Dobrovalski, 34, of Melvindale who has a peach air freshener hanging from his mirror, said the state shouldn’t ban innocuous items.

“You see people with big GPS deals on their windshields,” said Dobrovalski, a warehouse worker for U.S. District Court in Detroit. “That’s more of a difference than a little air freshener.”

I will be interviewed on a radio show, The Business Reality Network, this Sunday (July 13th) at 10:15 am. The show is on WDFN, 1130 AM and can also be heard via the web at www.businessrealitynetwork.com.

I will be discussing insurance along with opening and running a small business. You are invited to listen in.

Marty O’Neill, Insurance Agent

Good news and bad news. First, the bad news; the high gas prices have hurt our bank accounts and forced all of to rethink how much we drive.

The good news is that the less we drive, the less risk we are to an insurance company and insurance companies offer discount to those who drive less.

Today I have posted an article by M.P. McQueen about the discounts offered by insurance companies, including the one I represent.

For more questions about how this is effecting us in Ferndale, Royal Oak, Pleasant Ridge, Hazel Park, Berkley and the surrounding areas please contact me through this blog site. Thank you.  Marty O’Neill, Insurance Agent

By M.P. McQueen

Car owners who are changing their driving habits because of soaring gas prices may be able to save a few dollars on auto insurance.

Major car insurers including State Farm Mutual Insurance Cos., Travelers Cos. and Farmers Insurance Group say that drivers who log less than about 7,500 miles a year may be eligible for “low mileage” programs that reduce premiums an average of about 10% to 12%. State Farm’s program earns drivers discounts ranging from 12% to 18%, says spokesman Dick Luedke.

Car owners who drive more than that but less than they used to — perhaps because they have started using public transportation or walking to work — may also save on premiums, according to a study by the Consumer Federation of America. The group released a study Tuesday showing consumers could save 5% to 15%, amounting to $47 to $142 a year based on 2005 rates, when the average U.S. premium was $949, by cutting their mileage enough to drop into a different ratings category, say, from “drive to work” to “pleasure driving,” says J. Robert Hunter, insurance director for the Consumer Federation of America.

“Most insurance companies have a scale, and you pay more based on how much you drive. Each time you drive more, they charge you more,” Mr. Hunter says. Depending on ratings factors allowed by state regulators, the savings can be even greater, he says.

In California, for example, companies charge motorists based mainly on their driving history and miles driven, so driving more or fewer miles significantly affects the premium drivers there pay. Consumers should inform their agents of any big changes in their driving habits, says Mr. Hunter.

A few insurers in some states also give discounts to drivers who enroll in programs that use an installed monitoring device to track driving habits. The insurers charge drivers according to when, how, and how many miles they drive, so that those who log fewer miles pay less.

Progressive Group of Insurance Cos. pioneered its “MyRate” program, formerly known as “TripSense,” in Minnesota, Oregon and Michigan several years ago, and anticipates rolling it out in six more states in the next few months, pending regulatory approval. In those states, drivers get a 25% discount off regular rates for participating. The discount is expected to be even larger in the expanded program, says Richard Hutchinson, usage-based insurance general manager. Progressive also offers a low-mileage discount in four states. Since July 2007, GMAC Insurance from General Motors Corp. has offered eligible On-Star subscribers who drive less than 15,000 miles savings of up to 54% on their premiums, including an automatic 11% discount. The program is available in 34 states.

Several insurers, including Travelers and Farmers Insurance Group, a unit of Zurich Financial Services, also have rolled out discounts for drivers who switch to hybrid and other gas-saving vehicles. Since 2005, Travelers recently started offering a 10% discount on most coverages for owners of hybrid or other gas-saving cars in 44 states. The company says that hybrid-car owners are generally good risks. Farmers also offers an average 5% discount nationally on all major coverages including liability and property damage, says spokesman Jerry Davies.

As frequent readers know, I am very dedicated to promoting auto safety and keeping auto insurance rates low. Today I have posted an article from the National Institute for Highway Safety. It is about teen drivers and their phones. I hope you find it helpful–Marty O’Neill, Insurance Agent.

Arlington, VA — Teenage drivers’ cellphone use edged higher in North Carolina after the state enacted a cellphone ban for young drivers, a new Institute study finds. This is the case even though young drivers and their parents said they strongly support the restrictions. Parents and teens alike believe the ban on hand-held and hands-free phone use isn’t being enforced. Researchers concluded that North Carolina’s law isn’t reducing teen drivers’ cellphone use.

The two-part study coupled researchers’ observations of teenage drivers with telephone surveys of teens and their parents in the first evaluation of a cellphone law for young drivers. North Carolina’s ban for drivers younger than age 18 is part of the state’s graduated licensing system.

Just 1-2 months prior to the ban’s Dec. 1, 2006, start, 11 percent of teen drivers were observed using cellphones as theyleft school in the afternoon. About 5 months after the ban took effect, almost 12 percent of teen drivers were observed using phones. Most drivers were using hand-helds. Nine percent were holding phones to their ears, while fewer than 1 percent were using hands-free devices. About 2 percent were observed dialing or texting. Cellphone use remained steady at about 13 percent at comparison sites in South Carolina, where teen driver cellphone use isn’t restricted.

“Most young drivers comply with graduated licensing restrictions such as limits on nighttime driving and passengers, even when enforcement is low,” says Anne McCartt, Institute senior vice president for research and an author of the study. “The hope in North Carolina was that the same would hold true for cellphone use, but this wasn’t the case. Teen drivers’ cellphone use actually increased a little. Parents play a big role in compliance with graduated licensing rules. Limiting phone use may be tougher for them since many want their teens to carry phones.”

Parents and teens support cellphone ban: When surveyed after the cellphone restrictions took effect, teenage drivers were more likely than parents to say they knew about the ban. Only 39 percent of parents said they were aware of the cellphone law, compared with 64 percent of teen drivers. Support for the ban was greater among parents (95 percent) than teens (74 percent). Eighty-eight percent of parents said that they restrict their teenage drivers’ cellphone use, though only 66 percent of teenagers reported such parental limits. About half of the teenagers surveyed after the law took effect admitted they had used their phones, if they had driven, on the day prior to the interview.

Restrictions are rarely enforced: Most parents and teen drivers agreed that police officers weren’t looking for cellphone violators. Seventy-one percent of teens and 60 percent of parents reported that enforcement was rare or nonexistent. Only 22 percent of teenagers and 13 percent of parents surveyed believed the law was being enforced fairly often or a lot.

“Cellphone bans for teen drivers are difficult to enforce,” McCartt notes. “Drivers with phones to their ears aren’t hard to spot, but it’s nearly impossible for police officers to see hands-free devices or correctly guess how old drivers are.” Absent some better way to enforce them, “cellphone bans for teenage drivers aren’t effective, based on what we saw in North Carolina,” McCartt adds.

In both North Carolina and South Carolina, observed cellphone use was significantly higher among girls than among boys and higher when teens drove alone in vehicles rather than with friends. For example, 13 percent of female drivers and 9 percent of males were observed using cellphones in North Carolina before the law. Cellphone use was 14 percent among solo drivers and 8 percent among teens with 1 passenger. More SUV drivers than car drivers were viewed using phones.

Phone bans for young drivers are becoming commonplace as concerns mount about the contribution of distractions to teens’ elevated crash risk. Seventeen states and the District of Columbia restrict both hand-held and hands-free phone use by young drivers. Six states and DC bar all drivers from using hand-helds. For a state-by-state list of cellphone laws, visit www.iihs.org.

As many of my readers know, in addition to providing auto insurance, homeowner’s insurance and life insurance for the people in and around Ferndale, I also specialize in retirement planning and advocate saving for your future.

Today I have posted a column from The Detroit Free Press and columnist Susan Tompor. She writes about concerns related to CDs and potential pitfalls that might occur during investing in CDs–Marty O’Neill, Insurance Agent, Ferndale Michigan

 
BY SUSAN TOMPOR • FREE PRESS COLUMNIST • May 31, 2008

 
Putting money into an FDIC-insured certificate of deposit called a brokered CD could seem like a no-brainer. It’s insured after all, right?

But some savers found unsettling hurdles with so-called brokered CDs issued through one distressed Arkansas bank that brought in money from savers nationwide.

Federal regulators on May 9 closed ANB Financial National Association in Bentonville, Ark. It was the third closure this year of an FDIC-insured bank.

But more than two weeks later, many savers with the brokered CDs still do not have access to their money.

It is an unusual situation, but one worth talking about as savers push the limits to find more attractive interest rates and some banks run into financial troubles.

$1.6 billion left out of deal

ANB Financial, which had about $2.1 billion in assets, was the largest bank to be closed this year. Regulators blamed lax lending standards for construction and development loans.

Pulaski Bank and Trust Co. in Little Rock, Ark., assumed control of the bank’s locations. Insured deposit accounts were transferred to Pulaski Bank and were available immediately.

But ANB Financial had a high amount of brokered deposits — roughly $1.6 billion — that weren’t part of that deal.

Those deposits were held by investors all over the country, including Michigan.

The FDIC has the task of paying the brokers directly for the amount of their insured funds.

What savers must realize is that brokered CDs are not the same as an ordinary CD opened directly through a local or out-of-state bank.

Consumers can go to www.fdic.gov/deposit in order to see how insurance works and whether the Federal Deposit Insurance Corp. insures your money at a given institution.

Savings accounts, checking accounts and CDs are insured by the FDIC up to the legal limit of $100,000 and sometimes more for special kinds of accounts or ownership categories. For example, each person’s deposits in self-directed retirement accounts at the same insured bank are added together and insured up to $250,000. Naming beneficiaries to a self-directed retirement account does not increase insurance coverage.

Read disclosures carefully

Brokerage firms offer CDs, too. The deposit brokers can sometimes negotiate a higher rate of interest for a CD by promising to bring a certain amount of deposits to the institution.

These brokered CDs are then offered to customers.

If you put money into a brokered CD, read all the disclosures. You need to know which bank or thrift insures your CD.

The Securities and Exchange Commission has warned that consumers risk not being fully insured if their total deposits at the bank or thrift, including all brokered CDs at that bank, are above the insured limit.

You need to know up front if your broker plans to put your money into a bank or thrift where you already have other CDs or other deposits.

If the bank fails, typically, the healthy bank that assumes control of the troubled bank’s assets won’t agree to acquire the brokered CDs. It’s essential to understand if all your money in brokered CDs falls within the FDIC insurance limits.

David Barr, an FDIC spokesman, said most of the deposits at ANB Financial were brokered CDs, which is unusual.

As of Tuesday, the FDIC had released about $550.7 million out of $1.6 billion in brokered deposits at ANB. That’s roughly 35% of the deposits.

The situation is made more complex because about 180 brokers had funds on deposit at ANB. Paperwork is required to make sure that customers are only covered according to the limits.

The FDIC needs to cross-reference who has brokered CDs at that bank and how much they have in total through various brokers.

Adam Banker, a spokesman for Fidelity Investments, said Fidelity has provided the FDIC with information about many customers who had brokered CDs through ANB Financial. Fidelity is completing the paperwork for customers, but some customers may need to take more action.

But he said customers who have more than $100,000 in those CDs will need to submit more paperwork for the FDIC and return that paperwork to Fidelity so it can be submitted to the FDIC. Customers can get more information at www.fdic.gov.

No one could tell me how long the process could take for some consumers. It is unknown how long savers would have to wait to get the remaining money.

By Marty O’Neill, Insurance Agent

There are so many “rainy days” that people can experience - a sick child, a broken-down car or a late mortgage payment.

But what about a lawsuit?

These days lawsuits are being filed, not just against big corporations, but also against people like you and me.  In the blink of an eye, you could be involved in a car or boating accident, or have someone become injured on your property that could result in litigation against you seeking thousands or even millions of dollars.

Even though your primary insurance policies, such as Auto, Homeowners, Boatowners, etc., may provide substantial liability insurance coverage, it may not be enough. A Personal Liability Umbrella Policy provides additional amounts of liability coverage at an affordable price.
What is an umbrella policy?

A Personal Liability Umbrella Policy provides additional layers of liability coverage over the liability coverage of your underlying policies. Personal umbrella coverage amounts typically begin at one million dollars and can be increased in increments of one thousand dollars.

Here’s an example of how an umbrella policy could work: Let’s say your car is insured for liability with limits of $250,000 per person. You pull into an intersection, strike another vehicle and severely injure the other driver. This insured person sues you and the judgment against you totals $800,000. Your auto policy will pay the first $250,000 but an umbrella policy would respond for the next $550,000.
Also an umbrella policy often insures against some types of losses for which there is no coverage in the underlying policy. Examples of such loss include libel, slander and defamation of character.

Why have an umbrella policy?