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Sometimes life just is not fair. You think you have done everything absolutely right and then circumstances show you everything is turning out wrong. So it is that you get to see the end of hope played out in court cases. You know it should never come to this but, when it comes to people’s lives, there are few real choices if you feel you want justice. You do your best to be reasonable. You offer to settle. But the other side just fights on. It all comes down to willpower. Whoever is strongest will be left standing.

We need to go back to a time before the recession. This was a time of great optimism. People were getting married and planning their families around the idea of buying a new home. The first home would be the perfect nest for their first child. Property values would continue to rise and, as the family grew, they would keep trading up and cashing in their positive housing equities. This one family found a new estate just starting to build. They signed a contract in which the builder said it would deliver a residence in “a perfect condition”. There was also a set of minimum warranties imposed through the New Home Warranty Act of 1986 in Louisiana. As a third string to their bow, there was a home insurance policy. During a tropical storm, the roof leaked and the carpets were soaked. What the couple did not realize is that the water triggered the growth of a toxic mold behind the leaking walls. Their newborn baby’s health was permanently damaged by this mold and, during the resulting stresses and strains of medical treatment and disputes with the builders and the insurance company, their marriage collapsed.

In court, the three members of the family now claim for their losses. The parents claim for the loss of value in the property and the failed marriage. Their daughter claims for personal injuries. Midway through, the builder’s insurance company agrees to pay out on the loss in value of the house caused by the defective workmanship. In the end, the parent’s claim for failed marriage is dismissed because it was caused by the poor construction of their home and that claim was settled. The first moral to this story is that you can only make two claims when they are independent of each other. If one claims flows naturally from another, settling one means losing the other. But the daughter can claim because she was not a party to any of the contracts. Her remedy is in negligence for personal injuries. The builder and insurers are therefore looking at third party liability and that falls within the scope of the home insurance policy.

Unintentionally, the court has done the right thing. It has protected the interests of a baby whose life was wrecked by defective workmanship. It has approved the payment to the parents for the loss in value when the property became uninhabitable. But dismissed their claim because the marriage collapsed. These things happen and, unless in exceptional circumstances, they are not covered by homeowners insurance policies. The only problem is that, in arriving at this result, the parents are liable to pay the builder’s and the insurers’ costs. In effect, therefore, they get nothing out of all the stress of events and their legal consequences. Supposedly, they will be wiser for this experience.

What happens when the gulf oil comes ashore?

There is a sad fact of life when it comes to dealing with insurance companies. You should read all the small print before you buy a policy and, if you are surprised at how the insurer decides to interpret the policy when you make a claim, you must be ready with an attorney. Telling it as it is: insurance companies like to make a profit. If they have to pay out too many big claims, their profit starts getting small. That gives them an incentive to keep finding new ways to avoid paying out. When Hurricane Katrina hit the Mississippi Gulf Coast, home owners discovered their policies covered storm damage, but limited or excluded claims arising from flooding. The cause of much of the damage was a storm surge where the wind drove the water to higher than usual levels. The issue for the courts was whether the resulting damage was covered as storm damage or excluded as flood damage. The practical reality was that, for the people whose homes were damaged, the precise cause and effect mattered little. They had lost their homes. For the insurance companies, the courts were deciding claims worth billions of dollars. Needless to say, the courts at state and federal levels gave often wildly different interpretations and produced very different results. That is what happens when vast numbers of people line up to sue multiple defendants. Some win. Some lose.

One of the more interesting outcomes of the litigation was the decision of some insurance companies to stop selling policies in the Gulf states. They gave as their reason the increasingly uncertain legal environment. The companies that still write home insurance coverage now have different language. Policyholders hope the law will be on their side. The attorneys acting the the insurance industry remain confident they now have their clients protected.

Over the last few weeks, we have been watching a new slow-motion threat emerge in the Gulf of Mexico. The Deepwater Horizon rig operated by BP exploded and, with the pipe broken on the sea bed, crude oil is now pumping out into the water. Oil has already started to come ashore in Louisiana. Residents in the other states are taking out their policies to see what the small print says. So let’s say the average home owner with a property on the coast has a standard home insurance policy, federal flood insurance, hurricane and windstorm coverage, sinkhole coverage, and so on. What will happen when the oil comes? Well, there will be terms allowing claims in the event of an explosion. Unfortunately, the destruction of the rig happened too far away for it to count directly. A court would have to find the explosion was the main cause of the oil coming onshore. Winds and tides play their part in this process. So then we come to the terms allowing claims if the property is damaged by “pollutants”. Crude oil is a natural substance and not a pollutant as defined by insurers. But it is possible that, if it did damage the structure of your property, you would have a claim. Except, most properties are built on the land, not on stilts over the sea. Very few homeowners insurance policies cover damage to the land on which the house stands. The result? Win or lose, a lot of attorneys are going to get rich suing BP.

There are many people out there who still don’t know how insurance providers calculate their rates for insuring their autos. It comes to the point when people ask their insurance agents why their neighbors have lower rates while driving the same car and getting insurance form the same provider? Unfortunately, it’s quite common for insurance industry workers to deal with cases like this, because lack of necessary knowledge makes the customers very suspicious and unfriendly.

To go straight with the question, there are different factors that will impact the rates you will be charged for insuring your auto. One of the most important factors is the age of the policyholder. They say that age doesn’t matter. Well, probably for many other things it really doesn’t matter, however when it comes to insuring your vehicle, age plays a very important role in the overall equation. Below you will find some explanations on why the policyholder’s age plays such an important role and in what way does it influence the final rates.

Fresh drivers behind the wheel

Insurance company statistics tell that younger drivers tend to take risk far more often when behind the wheel than those who have are older and have more experience in driving. The direct consequence of such tendencies is that teen drivers tend to get involved in serious accidents far more often than drivers from other age groups. That is why insurance companies charge young inexperienced drivers with higher rates. However, if the young driver maintains a good record and doesn’t file any claims for a specific period of time, the rates can be reduced significantly.

Gender

This may sound la bit sexist, however there’s pure statistical fact that women tend to be more attentive and careful while being behind the wheel than men. Women file far less claims when having auto insurance, that’s why they usually have cheap auto insurance as compared to their male peers. However, male drivers still have the possibility to prove that they are better drivers by maintaining a good clean driver’s record and not getting involved in any traffic accidents. This way you can opt for premium discounts that will diminish the difference in rates according to gender.

Safety measures

Auto insurance is closely related to safety and security of the vehicle. The safer is the car, the less likely its owner to file an insurance claim, which eventually leads to lower premiums as compared to riskier vehicles. Things like anti-theft devices, alarms, airbags, additional seat belts, anti-lock brakes and other features that are used for increasing the safety and security of your vehicle will substantially reduce your rates regardless of your age. However, before installing such gadgets into your vehicle, make sure that your insurance company will provide you with such a discount and make sure that the devices you are trying to install comply with the company’s requirements. Still, having a secure and safe vehicle matters a lot, even if you don’t get a special discount for that.

Tough times for the Commissioner

One of the most important lessons of the last two years is that having regulators in place does not mean having consumer safety. Wherever you look from the failure of the SEC to police the banking industry, to the failure of the FDA to keep food and drugs safe, to the failure of the Minerals Management Service to prevent the oil disaster in the Gulf of Mexico, it’s clear the regulators have been asleep at the wheel of a Toyota car speeding out of control thanks to the National Highway Traffic Safety Administration. It does not matter who you want to blame: the politicians who take the money of business and industry to pay for their expensive election campaigns, the leaders of business and industry who want the maximum profit with no accountability, or the regulators who sit in the middle and hope no one will notice they do nothing. The result has been a catastrophic series of failures. And who gets to pick up the bill? Why taxpayers and consumers, of course. Tax revenues are used to bail out the companies too big to be allowed to fail, and everyone who buys goods and services gets to pay a little more every year in prices to keep the wheels well greased.

Why are we thinking about this right now? Well, every US state has a department or office of insurance run by a Commissioner who is supposed to protect our interests. In some states where the political wind blows more to the left, the Commissioners can be crusaders who protect our interests. But in states where the political wind blows to the right, the lawmakers pass weak regulations and fail to back-up the regulators who might want to “do something”. A classic example of the problem can be seen in Texas where the Commissioner has been fighting a losing battle with the insurance industry in general and State Farm in particular.

State Farm submitted rate plans announcing its intention to raise premium rates by 13%. The reality has proved rather different with some ZIP codes seeing hikes of up to 39%. Not surprisingly, the Commissioner is angry and has posted a lot of the correspondence on the state website. It seems State Farm thought the 13% increase was justified because of rising costs in the building industry for both materials and labor. It was also concerned this year might see more hurricanes, tornadoes and hailstorms. The Commissioner is also telling State Farm policy holders where to find cheaper coverage. He is fighting what he terms the insurer’s deceptions and misstatements. Even the lawmakers have become concerned as Texas now has the second highest average rates in the US for homeowners insurance cover. They are actually talking about giving the Commissioner the power to refuse premium increases!

Let’s be clear. There is nothing wrong with an insurance company increasing its rates to cover rising costs. If it believes there will be more losses in the next year, it can raise rates. But State Farm has crossed a line in Texas and even a GOP state can fight back when the electorate starts to complain. As it stands, if you live in Texas, you should check out the Commissioner’s website at Texas Department of Insurance for the latest information on the State Farm situation. You should also get the maximum possible number of homeowners insurance quotes to find cheaper alternatives to the State Farm policies.