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Homeowners’ Insurance and Gas Pipe Line Projects  

Frequently Asked Questions – Homeowner’s Insurance and Gas Pipe Line Projects

From the desk of Mark D. Sammarone, CIC, CISR
Vice President, Arthur Hall Insurance

(June 13, 2017) I have received a number of inquiries regarding what affect a gas pipeline passing through a homeowner’s property would have on their homeowner insurance coverage as well as the availability of coverage. Here are some answers to those questions.

QUESTION: Does homeowner insurance cost more if you live near a pipeline?

ANSWER: No, insurance should not cost more. Rates are currently formulated using predictive models which include various inputs such as municipality, fire protection, value of the home, do they also insure your cars, and a variety of data points about the insured themselves and the home such as credit score, home ownership, length of time at a house, length of time with prior insurer, whether they applied for coverage seven days or more before the effective date, prior claims for the insured AND claims at the location even under a prior owner. Like credit scoring, companies typically don’t divulge how exactly they weight the various inputs. Two wild possible exceptions might be if a home experienced lots of claims from the proximity to the pipeline that could factor into the predictive model on the basis of past claims…not necessarily the fact they came from a pipeline. Also if a home’s market value dropped dramatically below the construction rebuild cost [i.e. like an inner city home in a bad neighborhood], it creates a moral hazard where an insured would get more if the house was lost in a fire than if they sell it. However these are far stretching examples.

QUESTION: Would a pipeline accident/incident that impacts a home be covered under homeowners insurance? Or is it exempt from coverage?

ANSWER: This is a little more complex to answer how a policy might respond to an incident. The coverage trigger on a typical homeowner policy (HO-3) is “Direct physical loss to the building” which is incredibly broad. But the building MUST be damaged before coverage triggers. The only things that are not covered are things the insurance company thought to exclude. Thus a sudden and accidental incident should be covered unless one of these many exclusions apply. Short list of potential exclusions…..

EXCLUSIONS:
– Ordinance or law requirements
– Earth Movement (but you can buy earthquake and sinkhole coverage for additional premium)
– Flood (surface water running into their basement). National Flood Policy (NFIP) might not cover unless 1 square mile, or two or more properties impacted if you have one.
– Power failure
– Neglect
– War, Nuclear Hazard
– Intentional loss
– Governmental action – destruction, confiscation or seizure of property
– Faulty planning, zoning, development, design, workmanship, materials used, maintenance (meaning they will not fix someone else’s stupidity, but if the house catches fire and burns to the ground they could cover the fire loss).

Note – something not covered would be the cost to relocate UNLESS the house did receive damage and had a covered claim. An example of this would be an environmental incident near the home, but that did not physically damage the home. Additional living expenses are only triggered after a covered loss occurs.

QUESTION: Does the exclusion for “Governmental Action – destruction, confiscation or seizure of property” include a home that has a right of way taken by eminent domain? Similarly, does the exclusion apply in the case when the PUC grants the pipelines PU status including the right to claim eminent domain. If the incident occurs on the “taken” portion of the homeowner’s property or next to the homeowner’s property, will insurance still be valid in paying for any loss to home? Or does this PU status exempt insurance companies from paying a claim that occurs on property taken by eminent domain that affects nearby homes?

ANSWER: Coverage does not “globally” void just because of a government action such as eminent domain or easements. If the house becomes destroyed by something other than (the otherwise undamaged house) getting torn down by a governmental requirement, the policy pays as intended for normal claims. Normal meaning…direct physical loss to house….policy pays to repair the damaged portion only….and the policy can kick in an extra couple dollars (usually 10%) for those little upgrades you need to make to meet current building code that were not there originally.

QUESTION: If I am a condominium unit owner or renter, and I only insure my contents, how would my coverage respond to a pipe line event?

ANSWER: Similar to other homeowners, there are common covered perils such as explosion and fire. Also similar to other homeowners you can’t collect temporary living expense coverage unless you first have a property loss claim.

QUESTION: How is my personal liability coverage impacted by a pipeline located nearby or a utility easement that travels across my property?

ANSWER: A homeowner policy covers the insured members of your household against claims of bodily injury and property damage they cause to others as a result of their negligence. There are no special provisions in a typical homeowner policy altering the normal terms and conditions as a result of a utility line being in close proximity or under seizure by eminent domain.

These FAQ comments are provided as general interpretations based on common homeowner insurance policy language and are not to be considered binding. Please consult with your insurance professional for guidance in determining the specifics of your homeowner insurance program and how it may apply to these matters.

www.arthurhall.com

Advisor. Advocate. Agent

PennDOT Introduces a New, Safer, Traffic Signal  

A safer and more efficient left turn signal has debuted in Chester County, Pocopson Township at the intersection of Pocopson Road and Route 52 – the Flashing Yellow Arrow – and will be coming to other intersections near you soon.

The flashing yellow arrow means YIELD to oncoming traffic and pedestrians and to proceed with caution. This replaces the common circular green indication for left turns.

Benefits of Flashing Yellow Arrow

  • More intuitive to motorists
  • According to national data, can reduce left-turn crashes as much as 20%
  • Keeps traffic moving by offering motorists more opportunities to make left turns
  • Consistency with other states adopting the signal

Learn more about the Traffic Signal here

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Delaware Workers’ Compensation Rates for 2017  

No Change in Delaware Workers’ Compensation Rates for 2017

As part of our ongoing effort to keep you informed of insurance industry changes and how those changes may affect you and your business, we are able to announce that workers’ compensation rates in the state of Delaware will not increase in 2017.

The Department of Insurance and the Delaware Compensation Rating Bureau (DCRB) annually review insurance rates and original filings initially proposed average increases in residual market rates as well as voluntary market loss costs across the board for the upcoming year.  However, after consideration, Delaware Insurance Commissioner, Karen Weldin Stewart, announced that the average rate will remain flat with no increase.

“I hope this is the beginning of a period of rate stabilization in the workers’ compensation market,” Commissioner Stewart said in a press release issued by the Delaware Department of Insurance.  Keeping workers’ compensation rates flat for 2017 will have a positive impact on employers and their insurance packages.

It is important to note that these rates are the average. Certain classification codes may experience an increase or decrease in the actual rate.

If you have further questions or would like more information regarding your specific workers’ compensation rate, please speak with one of the advisors at Arthur Hall Insurance who will be happy to assist in reviewing your current situation and advise you accordingly.

 

Back to School Bus Safety  

Keep Kids Safe With These School Bus Safety Tips

It’s that time of year again…schools are gearing up for fall and that means more traffic and school buses filled with children on the roads.

Now is a good time for parents to remind children of these safety rules while at the bus stop and on the bus.

At the bus stop:

  • Arrive early – allow at least 5 – 10 minutes before scheduled pick up time.
  • Walk do not run to the stop – hurrying can lead to careless injury.
  • Stay on sidewalks if available – if no sidewalk, walk on the left side facing traffic.
  • Stand back, at least six feet away, from the curb to be visible to the bus driver.
  • Never speak to strangers and never get into a car with a stranger

On the bus:

  • Walk to your seat and sit down immediately.
  • Stay seated when bus is moving.
  • Do not hang out the windows or throw items in the bus.
  • Talk quietly so as not to distract driver.
  • In case of emergency, listen to driver and follow instructions.

When exiting the bus, be aware of moving cars and walk at least six feet away from the bus door to be visible to driver.

For Drivers sharing the road with school buses:

  • Be aware of school hours.
  • Follow posted speed limit signs in school zones.
  • Watch for children getting on and off the bus
  • Never pass a stopped school bus if the stop sign is extended or the red lights are flashing. Wait until the lights stop flashing and the bus begins moving again to proceed.

More information about safety for school bus riders and drivers and for those sharing the road is available from the National Highway Traffic Sagety Administration  at http://www.nhtsa.gov/School-Buses .

 

Information for this article is shared from The Cincinnati Insurance Companies blog

Ride-Sharing May Not Give You A Lift  

Recently, while visiting the city with my twenty-something daughter, I dared to experience my first ride-sharing venture. Admittedly, I was a bit leery but anxious to learn what these ride-sharing companies were all about. So I let her take charge, tap into her smartphone and call up  a quick ride around town to get to our desired location.

Easy! The request was accepted and we could track the vehicle on her phone. Block by block, I could see our ride’s approach, ticked down to the minute in real time. We even knew what make and model car to look for. All the information was available right on her hand-held device and within minutes, our car and driver pulled up, we jumped in, and off we went. To make it even simpler, no cash was exchanged. The entire transaction was completed via pre-loaded credit card from the ride-sharing app.  Didn’t even have to tell the driver our destination – that too was communicated via cell phone with the pick-up request.

Easy indeed! However, as I settled into the middle of the Volkswagen Jetta’s tiny back seat (minus the seatbelt), my mind filled with thoughts of the inherent risks associated with sharing the ride. Regulation and background checks aside, what if we are involved in an auto accident? Who is responsible and would any losses be satisfied appropriately?

Ride-sharing companies also known as Transportation Network Companies (TNC) provide taxi-like services to connect passengers to drivers via a smartphone app. Rides can be arranged in advance or on short notice. Unlike conventional taxi services, TNC drivers use their own private passenger vehicles to transport customers and because drivers are not transporting friends or family members, the operation becomes a commercial enterprise. In addition, these drivers cannot be considered limousine or taxi drivers because they are not using a commercial vehicle. Here in lies the problem: TNC’s are commercial enterprises and are not considered private in terms of insurance liabilities.

Many TNC drivers have neither a livery driver’s license (paid transportation services are considered livery) nor are their cars registered or insured as commercial vehicles. In order to have coverage, TNC drivers must have commercial insurance coverage. A personal auto policy does not provide coverage for ride-sharing and that personal coverage stops from the moment a driver logs into the TNC app to the moment the customer exits the car and the transaction is complete. TNC’s do have insurance but, the type and amount of insurance coverage provided by a TNC can vary greatly from company to company. Additionally, TNC drivers are not employees of a TNC and therefore not protected from risk as a traditional taxi or limousine driver would be covered. In the event of an accident, the injured TNC passenger may not be able to recoup damages as they would from those traditional transportation services. In fact, some state insurance regulators acknowledge that passengers are taking a risk when they pay for a ride with an uninsured or underinsured TNC driver.

If you think this sounds a little complicated, you’re not alone. This pioneer industry is prompting insurance carriers and companies to find ways to create coverage where none previously existed.  Simultaneously, local governments and municipalities struggle to draft legislation in an effort to create a framework from which to base coverage. TNC’s intentionally use their own distinct terms and language when writing policy, making it more challenging for municipalities to find corresponding terminology that conforms with the standard insurance vernacular. State legislators and insurance regulators are rightly concerned that the riders may not be adequately protected. As the industry continues to grow, legislators endeavor to address coverage issues to determine how to best underwrite the risks of personal lines policyholders driving private vehicles for hire. Colorado and California have passed legislation regarding TNC insurance coverage and it is suspected that, at some point, insurers will begin to offer policies and endorsements for the specific purpose using a private vehicle for hire with a TNC.

Adding even more flame to the fire, TNC companies are butting up against an existing system of taxis and PUC regulations. Long established professional livery for hire companies are attempting to block these newer, unregulated TNC’s from disrupting their businesses.

While it is exhilarating to be on the edge of a driving and ride-sharing revolution, it is best to be aware of the risks involved in either driving for and/or accepting a ride from a TNC. Prospective drivers should contact their own auto insurer is discuss any gaps in liability coverage and ask to review the TNC’s insurance contracts to be aware of the exact terms and conditions of coverage. Should a serious accident occur, passengers may need to engage their own auto and health insurance policies to satisfy damages/injuries not recovered by the TNC or driver. Be prepared to accept the challenges in case the ride doesn’t run as smoothly as the app would have you believe. Ultimately, maybe that easy ride isn’t so easy after all!