Interesting info for property owners

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Refi hit with title insurance 'junk fee' Is borrower required to pay? By Benny Kass  |  June 29, 2009 Inman News DEAR BENNY: We are in the final steps of completing a refinance of our barely year-old $410,000 mortgage. We were pleased with the interest-rate drop, and our local bank was generous in dropping many of the so-called "junk fees" associated with a refinance. However, we are being charged $1,007 for title insurance. When I asked our banker about this, the response was basically, "Well, yes, it is a rip-off but there is nothing we can do about it." My question for you is what do we get for this $1,007? And if we refinance again in a year (you never know), I assume we will have to pay this again? --Shelley DEAR SHELLEY: This is a question everyone always asks, whether they are buying a house or refinancing an existing loan. Why do we need title insurance? The simple reason: The lender always insists on it. If your banker believes it is a "rip-off," ask him if he is willing to waive this requirement. I doubt that he will. Title insurance protects the lender (and you if you have an owner's policy) against matters that do not appear on the land records. For example, there may have been a forged deed years ago and now there is a claim about that. There may be unpaid tax liens that could cause you grief without the title insurance policy. But your position is: "Hey, we own the property and got a title policy when we bought it. Why does the lender need a new one? I asked Jack Guttentag, the Mortgage Professor, this question, and here's his response: "You don't need a new owner's policy, but the lender will require you to purchase a new lender policy. Even if you refinance with the same lender, the existing lender's policy terminates when you pay off the mortgage. Furthermore, the lender is concerned about title issues that may have arisen since you purchased the property. A new title search will uncover any such issues, and you will have to pay it off as a condition for the refinance." One suggestion: Since you only recently obtained a title policy, you should be entitled to a discount -- called a "reissue rate." Don't forget to ask for it. DEAR BENNY: I used the equity in my primary residence to take out a home equity line of credit (HELOC). Two years ago, I used the HELOC to buy a condo as a second home. I am about to sell my primary residence and make a nearly $150,000 profit. I do NOT want to pay off the HELOC right now, as the condo is worth just $50,000 and I paid $150,000 for it. Must I pay off the HELOC when I sell my primary house? I am a nervous wreck thinking that all the profit I just made is going to have to go to pay off that condo, which is worth less than half of what I paid for it. Since the HELOC is a 10-year line of credit, can I continue to pay monthly on this? --Stacey DEAR STACEY: Sorry, but you will have to pay off the HELOC when you sell your primary residence. A HELOC is a "home equity line of credit," which is recorded as a mortgage (deed of trust) among the land records where your house is located. If you have a first mortgage, the HELOC is a second trust. When someone buys your house, they want title to be free and clear of all liens, encumbrances and mortgages. The HELOC lender will not release its lien on the land records unless that loan is paid off in full. The HELOC lender made this money available to you based solely on the equity in your house. If you were to default by not making payments, the lender would be able to foreclose on the property. But once the HELOC is released from land records, that lender has no more security. If the condo unit had any real equity, you might be able to get a new HELOC using the condo as collateral. But unfortunately, it does not. If your credit is good and you have other assets, a lender might be willing to give you an unsecured line of credit, but that's very difficult to get in today's economy. DEAR BENNY: We currently own several investment properties, along with our home. When we are ready to retire, we would like to be able to liquidate all of the properties in the same year, and in turn purchase a large bed-and-breakfast property. Will we be able to defer the capital gains on all of the properties that we liquidate if we turn around in the same year and purchase one larger, more expensive property? --Kim DEAR KIM: Yes, it is legally possible, but logistically improbable. If you own investment property, in order to defer (not avoid) capital gains tax there is a legal procedure known as a 1031 exchange (commonly called a "Starker exchange"). Under section 1031 of the Internal Revenue Service Code, if you carefully follow the rules, you can obtain a replacement property (or properties) and defer the capital gains tax. Oversimplified, the tax basis of the old property (called the relinquished property) becomes the basis of the replacement property. The rules are carved in legislative stone and cannot be waived or bent. When you sell a relinquished property, within 45 days from that sale you must identify the replacement property (or properties). And you must take title to the replacement property(s) within 180 days from the date of sale. In your situation, if it is possible to sell all of your investment properties and purchase the bed-and-breakfast within 180 days from the date of the first sale, you can accomplish a successful 1031 exchange. But as I have indicated, this is logistically difficult. This is very general information; talk with an experienced real estate and tax attorney who has experience with such exchanges for specifics. DEAR BENNY: My tenant who just moved into my townhouse three weeks ago has made a couple of requests that I find rather nitpicky. Can you please respond and give me your opinion on the following requests: (1) He found some spiders in the bedrooms and hallway and is now asking that I call an exterminator to remove them, and (2) a few light bulbs are starting to go out and he'd like me to replace them. I'd appreciate it if you could respond and let me know whose responsibility it is to handle these matters. --Amy DEAR AMY: Good luck. I hope that is all your new tenant ever asks from you. Any discussion about a landlord-tenant relationship has to start from the lease document itself. I assume (indeed hope) that you have a signed lease in your possession). Is there anything in your lease that directly -- or even indirectly -- addresses these two issues? More importantly, does the lease state that the tenant has inspected the property and accepts it in it "as is" condition? If so, then you really don't have to do anything. You are, unfortunately, on the horns of a dilemma. If you agree to take care of either or both of these matters, you will have set a precedent, so that absolutely everything that goes wrong in the house will be called to your attention. Here's my suggestion: Tell the tenant that these matters are his responsibility. Clearly, changing light bulbs is not the landlord's responsibility. As for the spiders, unless they are one of the dangerous kinds, that is also not your obligation. I would explain to the tenant that you will periodically exterminate (perhaps once every six months -- unless your lease states otherwise) but that you do not plan to address either of his concerns. Be friendly but firm; just make the tenant understand that he has certain obligations to maintain the house, and unless there are major problems, such as the washer/dryer does not work through no fault of the tenant, it is his obligation to make any such corrections. DEAR BENNY: My wife died in 2002. We owned our house together. When I sell the house how will the profits be taxed on the federal level? I believe I read somewhere that half of the value of the house will be stepped up as of the date of death. How does this work. How would I go about ascertaining its value in 2002? --Clinton DEAR CLINTON: Since you are not in a community property state, I will respond. I will leave those who live in such states as California to discuss this matter with their own attorneys. You originally owned the house jointly, probably as tenants by the entirety. On your wife's death, you became the sole owner of the property by operation of law. But for income tax purposes, you have to determine what the basis is for each of you. Let's say you bought the house many years ago for $100,000. That means that you and your wife's basis for tax purposes was $50,000 each. Let's further assume that you made no improvements to the property. On the date of your wife's death, the property was worth $400,000. Your basis now is $300,000. How do I get this? We take your basis, which remains at $100,000, and add half of the value of the property on the date of death -- namely $200,000. When you sell the property, if you have owned and lived in the house for two out of the five years before sale, you can exclude up to $250,000 worth of any gain. How do you determine the value back in 2002? Perhaps you and your wife refinanced the property just before she died. There will be an appraisal in the file that was required by your lender. Otherwise, go to the county tax records and find out what they were assessing the property for back in 2002. The IRS will accept that valuation. Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com. *** What's your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story. Copyright 2009 Benny L. Kass

© Copyright 2009 The New York Times Company
 

A New Way to Price Auto Insurance?

Auto insurance by the mile coming closer in California

SACRAMENTO
June 26, 2009 9:50am

•  State would be first in the nation
•  ‘We may see fewer cars on the road’

California drivers may soon be able to pay insurance premiums based on the number of miles they drive, potentially saving money for those who drive less.

Department of Insurance Commissioner Steve Poizner on Friday revealed revised regulations that will allow companies to sell automobile insurance by the mile, letting consumers pay only for the miles they drive.

"These regulations expand insurance options for consumers, allowing a freer market to create incentives for driving less," says Mr. Poizner. "By empowering consumers to take charge of their insurance bill, we may see fewer cars on the road; which means cleaner air, safer streets and lower premiums."

Insurance companies can continue to offer traditional coverage based on estimated mileage. However, now they can also offer a verified mileage program instead of or in addition to a traditional estimated mileage program.

Pay-as-you-drive insurance is a way for motorists more accurately to pay for the coverage they need, by linking their premium more closely to the number of miles they actually drive, says Mr. Poizner.

Under the prepaid, or "price per mile" option, consumers would have a new option to purchase a block of miles at a specified price for a set time period. If a consumer runs out of miles before the end of the policy period the consumer can purchase more miles, Mr. Poizner says.

The revised regulations also allow insurers to offer discounts to drivers who opt to purchase a mileage verification policy.

If a driver elects to purchase a pay-as-you-drive policy, the insurer would verify the driver's miles through a variety of methods, including odometer readings taken by the insurer or its agents or vendors, auto repair dealers, smog check stations, self-reporting by the policyholder or a technological device placed in the consumer's vehicle, the insurance commission says.

The amended regulations explicitly prohibit insurers from gathering location data from consumers through the “technological device” which would track mileage.

“It is vital that the privacy of drivers remains intact. In these amended regulations, I have expressly prohibited insurance companies from using GPS devices to obtain location data from consumers," says Mr. Poizner.

Pay-as-you-drive coverage has been touted by environmental groups as a way to help the environment, he says. Last August, the Environmental Defense Fund estimated that if 30 percent of Californians participated in the coverage, California could avoid 55 million tons of CO2 emissions between 2009 and 2020, save 5.5 billion gallons of gasoline and save Californians $40 billion dollars in car-related expenses, Mr. Poizner says.

Additionally, the California Air Resources Board has recommended the adoption of pay-as-you-drive as one of the means to meet future climate change gas reduction targets, he says.

California law has procedures in place to allow for public involvement in adopting new regulations, including public comment on the revised regulation. After these procedures are completed, the regulations will take effect as soon as possible. Insurers will then be able to apply to offer pay-as-you-drive insurance in California. The regulations are anticipated to take effect in fall 2009.

Copyright Central Valley Business Times © 2009
Central Valley Business Times is an online unit of BizGnus, Inc.

Why buy Health Insurance?....because the Gov't said so!

No health care? Expect a requirement to get it

By LIZ SIDOTI – 3 days ago

WASHINGTON (AP) — Don't have health insurance? Don't want to pay for it? Too bad.
It's looking like President Barack Obama and the Democratic-controlled Congress are going to require you to pick up the bill.
In Washington-speak, it's called an individual mandate — or a requirement that people who don't already have health insurance to purchase it, much like most states require drivers to have automobile insurance.
Obama long has been wary of the idea, arguing that people cannot be required to buy coverage if they can't afford it. His plan during the presidential primary didn't require all adults to have coverage, only children. He and then-rival Hillary Rodham Clinton, who backed a universal requirement, sparred repeatedly over the issue.
Now in the White House, Obama has set in motion steps toward his broad goal of making health care more affordable, improving quality of care and expanding coverage. Says Obama: "We are not a nation that accepts nearly 46 million uninsured men, women and children."
He largely has left it to the House and Senate to work it out.
But in recent weeks, Congress signaled that legislation overhauling health care was all but certain to require that people have insurance. Of course, details about how to implement such a mandate must be worked out — and there are many — but the overall concept increasingly seems on track to be included in any sweeping health care overhaul that makes its way to Obama's desk.
The president's support for the requirement is recent — and conditional.
In a letter in early June, he told key Senate Democrats writing legislation that he was willing to consider their ideas for "shared responsibility," requiring people to have insurance with employers sharing in the cost. "But," he added, "I believe if we are going to make people responsible for owning health insurance, we must make health care affordable."
He went a smidgen further last week.
"I am confident in our ability to give people the ability to get insurance," he told doctors. Thus, he said: "I am open to a system where every American bears responsibility for owning health insurance, so long as we provide a hardship waiver for those who still can't afford it."
Obama also indicated that if he were giving a little, insurance companies eager for new customers must as well, and called on them to stop denying coverage based on pre-existing conditions. Said Obama: "The days of cherry-picking who to cover and who to deny — those days are over."
Even before the president took office in January, the insurance industry, which killed former President Bill Clinton's health care overhaul, indicated it was willing to accept that trade-off, making a mandate all the more likely.
Democrats have opposed such a mandate in previous years, fearing it would disadvantage the poor. In fact, it was Republicans, including 1996 presidential nominee and former Sen. Bob Dole, who pushed the idea in the 1990s.
These days, it's hard to find many opposed to a requirement.
Insurers like it: A mandate means a ready pool of new customers. Businesses back it: They say employers alone shouldn't shoulder the responsibility to pay for coverage. Hospitals cheer such a provision: They're tired of absorbing the costs of the uninsured seeking medical attention. Doctors support it: They want to stop providing services for free. And advocates for the poor are conditionally favorable: They want adequate subsidies and so-called hardship waivers.
Even so, at least some conservative Republicans likely will argue that Obama is stepping on individual rights by mandating coverage, expanding government's hand in the health care industry and creating a pathway to socialized medicine. Just last week, congressional conservatives offered their own plan. It would not mandate people to carry insurance.
But even Republicans say a requirement is likely.
"I believe there is a bipartisan consensus to have individual mandates," says Iowa Sen. Chuck Grassley, the top Republican on the Senate Finance Committee. The reason is fairness, he says: "Everybody has some health insurance costs, and if you aren't insured, there's no free lunch. Somebody else is paying for it."
It's support like this that's meant Obama has been able to shift positions with seemingly little political peril.
"Because there's a consensus among both the stakeholders and the legislators that this is the direction to go, the president essentially doesn't have a reason not to support it," said Judy Feder, a senior health care official under Clinton who now is at the liberal Center for American Progress.
Still, Congress must figure out how to enforce such a mandate, eligibility for a so-called hardship waiver, tax credits so people can afford health care and subsidies for the poor to help them buy coverage.
House and Senate committees are in the midst of haggling over such issues, and independent analysts expect a final bill to emerge that includes both waivers and sliding-scale subsidies to meet Obama's conditions
"There's no doubt that to be acceptable, it has to be regarded as fair and that you're not requiring people to buy insurance that's not affordable to them," said John Holahan, the Urban Institute's health policy center director.
Any plan is likely to be modeled after one in Massachusetts, which required that virtually everyone have health insurance or face tax penalties.
People who were deemed able to afford health insurance but who refused to buy it during 2007 faced losing a personal tax exemption and the prospect of monthly fines. The law exempted anyone who made less than the federal poverty level and gave them free care. And, those making up to three times the poverty level could get subsidize plans. Businesses with 11 or more full-time employees who refused to offer insurance also faced fines.

Copyright © 2009 The Associated Press. All rights reserved.

Your Insurance Team

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Who Plays on Your Insurance Team?

June 22, 2009 11:00 AM ET | Philip Moeller | Permanent Link | Print

The Boomerater™ Report, our weekly collaboration with online baby boomer resource Boomerater, this week explores the insurance coverage you need to be properly protected. Certified financial planner Paul Bennett is today's guide; Paul is a featured advisor in Boomerater’s financial advisor directory.

[See 6 Tips to Save on Insurance Costs.]

Life Insurance. If you are still working and have a family, life insurance is very important. Your ability to earn a living is your most valuable asset. If you are no longer on the “right side of the grass” as a client once said to me, then your ability to earn a living goes away as well; you can figure out the rest. There are basically two different types of life insurance: term and permanent. Term insurance is less expensive than permanent and you can view it the same way you would view your auto policy – every year it renews and every year you pay a premium that is essentially an expense. Once the term of the policy is over, then you no longer have a policy. Most term policies can be purchased for 10, 15, 20 or even 30 year level premiums.

Permanent insurance comes in many varieties (whole, universal, variable, indexed, private placement, etc.). For the sake of brevity, let’s discuss whole life. Whole life insurance is something you may own for your “whole” life. Essentially you pay premiums into the policy for a given amount of coverage for a specified amount of time (sometimes indefinitely). A cash value builds inside of the policy on a tax-deferred basis. As long as you pay the scheduled premium, you have coverage.

[See also Is Longevity Insurance Right for You?]

Disability Income Insurance. If you are still working, you should protect your biggest asset: your ability to earn a living! Disability insurance pays you if you become disabled, usually up to 60 percent of your salary. If your premiums are paid with after-tax dollars then the benefits are received tax-free. As an aside, most group policies offered by employers are good but many leave gaps in coverage that an individual policy would cover.

Homeowners Insurance. You will need to decide between a cash value policy and a replacement cost policy. A cash value policy will pay you for the value of the home at the time of its destruction which includes depreciation. A replacement cost policy will be more expensive, but will cover the costs of rebuilding your home to comparable quality. A key thing that many people forget to do is inform their agent regarding any improvements that were made to the home so that the valuation can be adjusted accordingly. If you are moving to a retirement community or assisted living facility you should switch to renter’s insurance. These facilities should have coverage for fire, destruction of property, etc. Make sure they do. However, contents would be covered under a renter’s policy, even though in a lot of instances one “purchases” not rents their unit in the retirement community. Title is usually not conveyed on these transactions and in actuality is just a large deposit you put down to live in the unit.

Contents: Jewelry, antiques and electronics all should be covered. How they are covered and to what limits are the important questions. Jewelry and antique riders can cover specific items, such as an engagement ring or a fine painting. Make sure you update your rider when you get that new watch or a new piece of art. Most of the other items in the home should be covered up to 75 percent of the face value of the policy for contents. However, theft of fine jewelry or collectibles may not be covered unless you have a rider.

Continue reading the rest of this post about the insurance you need to have. We discuss long-term care insurance, umbrella liability, and the key takeaways for each insurance type.

We need more Dr.'s

Primary-Care Doctor Shortage May Undermine Reform Efforts
No Quick Fix as Demand Already Exceeds Supply

By Ashley Halsey III
Washington Post Staff Writer
Saturday, June 20, 2009

As the debate on overhauling the nation's health-care system exploded into partisan squabbling this week, virtually everyone still agreed on one point: There are not enough primary-care doctors to meet current needs, and providing health insurance to 46 million more people would threaten to overwhelm the system.

Fixing the problem will require fundamental changes in medical education and compensation to lure more doctors into primary-care offices, which already receive 215 million visits each year.

The American Academy of Family Physicians predicts that, if current trends continue, the shortage of family doctors will reach 40,000 in a little more than 10 years, as medical schools send about half the needed number of graduates into primary medicine.

The overall shortage of doctors may grow to 124,400 by 2025, according to a study by the Association of American Medical Colleges. And, the report warns, "if the nation moves rapidly towards universal health coverage" -- which would be likely to increase demand for primary care and reduce immediate access to specialists -- the shortages "may be even more severe."

Many of the measures needed to compensate for shortages -- such as easing the debt incurred by medical students and expanding the role of community health centers -- are included in the provisions being put forth by lawmakers, but there is no quick or easy fix within the grasp of Congress or the Obama administration.

"You're talking about an eight-to-12-year period to fix the problem," said Robert L. Phillips Jr., director of the Robert Graham Center for Policy Studies in Family Medicine and Primary Care, part of the American Academy of Family Physicians.

Evidence that demand already exceeds the supply of primary-care doctors ripples through the system as patients increasingly have trouble finding a new doctor, then wait weeks or months for an appointment, spend more time in the waiting room than in the examining room, encounter physicians who refuse to take any form of insurance, and discover emergency rooms packed with sick people who cannot find a doctor anywhere else.

With 248 primary-care physicians per 100,000 residents, Washington fares far better than the national average of 88 doctors per 100,000 people (Maryland has 113; Virginia, 88). Nonetheless, with an average wait of 30 days to see a family doctor, Washington ranks third among cities with the longest wait times.

Fifty years ago, half of the nation's doctors practiced what has come to be known as primary care. Today, almost 70 percent of doctors work in higher-paid specialties, driven in part by medical school debts that can reach $200,000.

"We need to rethink the cost of medical education and do more to reward medical students who choose a career as a primary-care physician," President Obama said in a speech to the American Medical Association on Monday.

The average annual income for family physicians is $173,000, while oncologists earn $335,000, radiologists $391,000 and cardiologists $419,000, according to recent data compiled by Merritt Hawkins, a medical recruiting firm.

The disparity results from Medicare-driven compensation that pays more to doctors who do procedures than to those who diagnose illness and dispense prescriptions. In 2005, for example, Medicare paid $89.64 for a half-hour visit to a primary-care doctor in Chicago, according to a Government Accountability Office report. It paid $422.90 to a gastroenterologist who spent about the same amount of time performing a colonoscopy in a private office. The colonoscopy, specialists point out, requires more equipment, specialized skills and higher malpractice premiums.

In his AMA speech, Obama described that fee-for-service system as one that rewards the "quantity of care rather than the quality of care," adding: "That pushes you, the doctor . . . to order that extra MRI or EKG, even if it's not necessary."

The lure of cutting-edge technology also attracts doctors of the cyberspace generation to the specialties that use most of it.

"There's definitely a huge bias against family medicine and primary care," said Winston Liaw, who is serving his residency at Fairfax Family Practice.

Djinge Lindsay said most of her classmates at George Washington University's medical school went into specialties for the "money and prestige."

"The attitude is that primary care is a fallback if you're not smart enough or good enough," said Lindsay, now a resident in primary care at Georgetown University Hospital.

By 2000, 14 percent of U.S. medical school graduates were entering family medicine. Five years later, the figure was 8 percent, and a recent survey of students interested in internal medicine showed that 98 percent wanted to become specialists.

The career path of these doctors has also been shaped by a desire for greater control of their lifestyle.

"It's an important job to them, but it's not their whole life," said Terence J. McCormally, a Fairfax family doctor who graduated from medical school in 1978. "The class of 1978 was all into delayed gratification: 'We'll work long hours, and we'll stay at the hospital to all hours.' Medical students now aren't willing to delay gratification."

Many want jobs that do not carry as much responsibility for on-call or weekend work. Far more doctors, women in particular, prefer jobs that require fewer than 40 hours a week.

About a third of America's doctors, and half of its medical students, are women. One survey by the Association of American Medical Colleges and the American Medical Association found that female doctors reported working 38.6 "patient care" hours per week and their male counterparts worked about 46 hours.

Fifty-four percent of women counted flexible scheduling as very important, compared with 26 percent of men. Almost twice as many women said they preferred jobs with limited or no "on call" responsibilities.

Family physician Sandy Ratterman's father practiced family medicine in Ohio.

"He worked much harder than I do, but he had a wife [at home] and I don't," said Ratterman, whose husband is a lawyer. She sees patients in Fairfax three mornings a week and cares for her four children, ages 11 to 2, the rest of the time.

In the various legislative proposals under debate, Congress and the administration have moved toward providing incentives for doctors entering residency programs to pursue careers in primary care. Most residency slots are funded through Medicare, giving the government a stick to wield over residency administrators, and changes in Medicare reimbursement alluded to by Obama on Monday could be the carrot that makes primary care more attractive.

But proposals to change that funding scheme to favor primary care have encountered resistance from lobbyists for specialists.

Obama also wants to expand the National Health Service Corps, which helps medical students pay tuition in return for two to four years of service in communities that do not have enough doctors.

Community health centers would be expanded under all of the major proposals. And the measures envision far greater use of nurse practitioners and physician assistants, who would be teamed with doctors in larger groups.

A study by the Robert Graham Center and the National Association of Community Health Centers concluded that 15,585 more primary-care providers would be needed in order for health centers to serve 30 million new patients.

It takes six years to educate a nurse practitioner and a dozen years to produce a doctor. Even if Medicare funding for residency programs is increased, if medical schools increase their enrollments by the 30 percent recommended by the Association of American Medical Colleges and if financial incentives to enter primary care are put in place, it will take years to build the health-care system into the new model.

Washington has also been training a microscope on the groundbreaking effort in Massachusetts to provide everyone in the state with health insurance: Adding 340,000 people to the rolls of the insured there since 2006 has underscored a shortage of doctors. It takes 63 days on average to get an appointment with a family doctor in Boston, more than twice the wait in Washington, and seven times as long as in Philadelphia and Atlanta, according to a Merritt Hawkins survey.

"If Massachusetts is any guide, with increased access you'd see pent-up demand for health care, and you'd see a lot of frustration with the waiting time to access health care," Phillips said. "It'll swamp the emergency rooms, and those people will be seeking health care in the most expensive settings."

Can the private sector compete with the Government?

June 20, 2009

House Unveils Health Bill, Minus Key Details

By ROBERT PEAR and DAVID M. HERSZENHORN

WASHINGTON — House Democrats on Friday answered President Obama’s call for a sweeping overhaul of the health care system, unveiling a bill that they said would cover 95 percent of Americans. But they said they did not know how much it would cost and had not decided how to pay for it.

The proposal would establish a new public health insurance plan to compete with private plans. Republicans and insurance companies strenuously oppose such an entity, saying it could lead to a government takeover of health care. The draft bill would require all Americans to carry health insurance. Most employers would have to provide coverage to employees or pay a fee equivalent to 8 percent of their payroll. The plan would also end many insurance company practices that deny coverage or charge higher premiums to sick people.

“Health insurance for most American families is just one big surprise,” said Representative George Miller of California, the chairman of the Education and Labor Committee. “When you go to use it, you find out it’s not quite as it’s represented, and you spend hours on the phone with exclusions and discussions and referrals to other legal documents that you didn’t have at the time you purchased it.”

The 852-page House bill, as expected, is more expansive than the legislation taking shape in the Senate, where work on the issue bogged down this week after early cost estimates came in far higher than expected. The initial price tag for a measure drafted by the Senate Finance Committee, for example, was $1.6 trillion over 10 years.

Similar sticker shock could hit House members when they see the cost of their bill, which incorporates many ideas from health policy experts about how to fix the health system.

Industry critics of the emerging Senate bill are likely to have even more objections to the House version, but House Democratic leaders can probably push their measure through on a party-line vote.

Under the House bill, health insurance would be regulated by a powerful new federal agency, headed by a presidential appointee known as the health choices commissioner.

The draft bill was unveiled by three committee chairmen — Mr. Miller; Henry A. Waxman of California, chairman of the Energy and Commerce Committee; and Charles B. Rangel of New York, chairman of the Ways and Means Committee. The chairmen, all first elected in the 1970s, have worked together in secret for months to develop a single bill.

The proposal would expand Medicaid eligibility, increase Medicaid payments to primary care doctors and gradually close a gap in Medicare coverage of prescription drugs known as a doughnut hole. The bill would also reverse deep cuts in Medicare payments to doctors scheduled to occur in the next five years. Taken together, these provisions could significantly drive up the bill’s cost.

The bill would impose a new “tax on individuals without acceptable health care coverage.” The tax would be based on a person’s income and could not exceed the average cost of a basic health insurance policy. People could be exempted from the tax “in cases of hardship.”

Asked why there was no cost estimate for the bill, the House Democratic leader, Steny H. Hoyer of Maryland, said: “Until we have a final product, we are reluctant to ask the Congressional Budget Office for a score. But whatever we do will be fully paid for.”

House Democrats pledged to offset the cost of their legislation by reducing the growth of Medicare and imposing new, unspecified taxes.

Republicans, who had no role in developing the bill, denounced it as a blueprint for a vast increase in federal power and spending.

“Families and small businesses who are already footing the bill for Washington’s reckless spending binge will not support it,” said the House Republican leader, John A. Boehner of Ohio, who raised the specter of federal bureaucrats’ making medical decisions for millions of people.

Business groups also were not pleased. “There is enough to see here already to know that we would be compelled to oppose this bill,” said E. Neil Trautwein, a vice president of the National Retail Federation.

But John J. Sweeney, president of the A.F.L.-C.I.O., praised the House bill, saying it provided “a road map for what health care reform should look like.”

The House chairmen described their bill as a starting point in a battle that would dominate Congress this summer and ultimately involve the full range of interest groups in Washington. The three House committees plan to hold as many as six hearings on the bill next week. Mr. Waxman said lawmakers were committed to considering all ideas, even a proposal to tax some employer-provided health benefits, which he opposes.

The House bill shows what Democrats mean when they speak of a “robust” public insurance plan.

Under the bill, the public plan would be run by the Department of Health and Human Services and would offer three or four policies, with different levels of benefits. The plan would initially use Medicare fee schedules, paying most doctors and hospitals at Medicare rates, plus about 5 percent. After three years, the health secretary could negotiate with doctors and hospitals.

But the bill says, “There shall be no administrative or judicial review of a payment rate or methodology” used to pay health care providers in the public plan.

Scott P. Serota, president of the Blue Cross and Blue Shield Association, said, “A government-run plan that pays based on Medicare rates, for any period of time, is a recipe for disaster.”

The bill would limit what doctors could charge patients in the public insurance plan, just as Medicare limits what doctors can charge beneficiaries.

In setting payment rates for doctors and hospitals under the public plan, the bill says, the government should try to reduce racial and ethnic disparities and “geographic variation in the provision of health services.”

The public plan would receive an unspecified amount of start-up money from the federal government. After that, it would have to be self-sustaining.

The bill would require drug companies to finance improvements in the Medicare drug benefit. Drug companies would have to pay rebates to the government on drugs dispensed to low-income Medicare beneficiaries.

The bill would expand Medicaid to cover millions of people with incomes below 133 percent of the poverty level ($14,400 for an individual, $29,330 for a family of four). The cost would be borne by the federal government.

The government would also offer subsidies to make insurance more affordable for people with incomes from 133 percent to 400 percent of the poverty level ($43,300 for an individual, $88,200 for a family of four).

Another Opinion

Health Care Bill: Does Everyone Need Health Insurance?

By Meg C.

Takeaways The current healthcare bill in Congress is 852 pages and doesn't address how to pay for reforms Health Insurance and healthcare costs have risen 119% since 1970. Wages have increased 34%. The current bill would require employers to provide health insurance or pay a fee.

Health insurance is one of my biggest monthly expenses outside my mortgage. I am fortunate in that my employer offers a very good health insurance plan. Despite having adequate health insurance, the cost of healthcare is still high. I try not to complain too much about the cost of healthcare for my family - after all, millions of Americans do not have access to health insurance.President Barack Obama has made it his mission to make health insurance accessible to everyone in America. His goal is to reduce the cost of healthcare for everyone. At first, I kind of wondered what the big deal was. After all, even when my cost of healthcare seems high I feel blessed enough to have health insurance. According to CNN, healthcare spending has outpaced economic growth by forty years.Think about that for a minute. Healthcare spending increased 119% between 1970 and 2007 while wages only increased 30%. For one to say that healthcare spending isn't an issue, the two percentages need to be a lot closer than they are.The current healthcare bill that is in Congress is a whopping 852 pages. A common misconception is that healthcare reforms would provide free healthcare to everyone. This is not the case. The current draft of the healthcare reform bill includes items such as a requirement for employers to offer a minimum amount of healthcare and pay a certain required amount of the premium. If an employer did not offer health insurance, they would have to pay a fee of 8% of payroll to help employees purchase health insurance. Of course, some small businesses would be exempt from this requirement. Considering a vast majority of employers in the US are small businesses, I am still not 100% certain reforms would meet this goal.The bill in its current state would cost $1 TRILLION and reduce the uninsured by 1/3. How are we going to pay for this health insurance bill? That's a really good question. The current healthcare bill says nothing about how we will pay for this. At a time when unemployment is in the double digit percentages, home values are falling, and the economy is unraveling, I don't know where we would find the money to pay for this. Are healthcare reforms really necessary? Despite the current high costs of health insurance, the US still has one of the best healthcare systems in the world. Citizens of other countries with socialist "universal health insurance" programs experience long wait times for simple lifesaving procedures. Even though universal health insurance and lower healthcare costs sound wonderful, it's important to think of the ramifications. If you support the healthcare bill, don't complain when taxes increase exponentially and you have a lower quality of life.Resources:http://money.cnn.com/2009/06/19/news/economy/health_care_reform/index.htm?postversion=2009061917

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The Devil's in the Details

Dems look to cut cost of health care bill

By DAVID ESPO – 13 hours ago

WASHINGTON (AP) — Jolted by cost estimates as high as $1.6 trillion, Senate Democrats agreed Tuesday to scale back planned subsidies for the uninsured and sought concessions totaling hundreds of billions of dollars from private industry to defray the cost of sweeping health care legislation.

At the same time, key Democrats disagreed openly among themselves over a proposed tax on health insurance benefits to pay for expanding coverage to the uninsured.

And a compromise with Republicans over a role for government in the insurance marketplace remained elusive.

Despite numerous uncertainties, Sen. Christopher Dodd, D-Conn., announced that the Senate Health, Education, Labor and Pensions Committee would begin formal work Wednesday on legislation to provide "successful, affordable, quality health care."

The meeting would mark the first public drafting session in either chamber on legislation to control the costs of health care while expanding coverage to the nearly 50 million who lack it — a goal that President Barack Obama has placed atop his domestic agenda.

Separately, the Senate Finance Committee is expected to begin work next week on a companion measure. Several officials said the Congressional Budget Office had issued a cost estimate of $1.6 trillion, with only about $560 billion paid for. They spoke on condition of anonymity, saying the matter was confidential.

Sen. Max Baucus, D-Mont., chairman of the panel, dismissed the estimates as outdated, and officials predicted the final bill would come in under $1 trillion.

Sen. Kent Conrad, D-N.D., said that with cost estimates coming in so high, "It is clear there have got to be changes made to make the whole package affordable."

In a brief interview with The Associated Press, Baucus also disclosed he was "very close" to agreement with a handful of industry groups for them to accept hundreds of billions of dollars less in Medicare and Medicaid fees than they currently are projected to receive. He said the talks have involved insurance companies, hospitals, doctors, pharmaceutical firms and the makers of medical devices, among others, but did not provide a specific figure for the savings overall.

The efforts are separate from pledges that Obama won earlier in the year from industry groups to restrain future increases in health care spending by roughly $2 trillion over a decade. In a letter to Republicans, the CBO said "most of the proposals are steps that do not require the involvement of the federal government or are not specified at a level of detail that would enable CBO to estimate budgetary savings."

Numerous officials said cost constraints were forcing Democrats in both committees to refine their plans of offering federal subsidies to help the uninsured buy health coverage.

At the Senate Health panel, officials said that after penciling in subsidies for families with incomes as high as $110,000, or 500 percent of the federal poverty level, they would limit the help to families up to $88,000 in income, or 400 percent of the poverty level. A preliminary CBO estimate on that measure, released Monday, calculated a cost of $1 trillion.

The emerging Finance Committee bill also cuts off subsidies at 400 percent of the poverty level, but officials said that might be lowered due to cost concerns.

These officials spoke on condition of anonymity, citing confidential deliberations.

To pay for the legislation, Baucus has signaled he intends to propose a tax on health insurance benefits for individuals with the costliest health insurance coverage, possibly plans with premiums totaling more than $15,000 between employer and employee combined. Obama campaigned aggressively against the idea when Republican rival Sen. John McCain proposed it during last year's presidential campaign.

While the president has recently signaled flexibility on the issue, Dodd criticized it for potentially penalizing individuals and families at a time they are under financial pressure. "I'm not attracted to that idea," he said.

Other senators, allied with organized labor, have also expressed opposition, although Baucus has told reporters he could exempt health benefits included in union contracts from the tax.

Baucus has been negotiating privately with Sen. Chuck Grassley, R-Iowa, the senior Republican on the committee, over the role of government in insurance.

Democrats generally favor allowing government to offer insurance in competition with private companies, and Republicans oppose it.

Conrad last week offered a compromise that would allow nonprofit cooperatives to sell policies, and he joined Baucus and Grassley in a closed-door evening session to review their efforts.

Grassley said before the meeting that nothing was finalized yet, and indicated the sticking point was Baucus' insistence that the federal government play a behind-the-scenes role.

Baucus told reporters, "The goal of public option is to keep the health insurance (industry's) feet to the fire. Make sure they do all the things we tell them to do in the legislation." He said another goal is to keep costs down.

But, he added he remains open to "another way to accomplish the same result."

In an interview with The Associated Press, Health and Human Services Secretary Kathleen Sebelius stressed that Obama is open to compromise on the issue of a public plan. She spoke positively of the compromise proposal of cooperatives, which she said could receive seed money from the Treasury but then be free of control.

She predicted that in the end, the insurance industry will blink first in a showdown over the issue.

"I think they understand there's a lot of momentum both in the House and in the Senate for something to pass, and they'd much rather be inside the room, having those discussions, and helping to shape it as much to their liking as they possibly can," she said.

Associated Press writers Ricardo Alonso-Zaldivar and Erica Werner contributed to this report.

Copyright © 2009 The Associated Press. All rights reserved.

The Hidden cost of Small Cars?

Inside Insurance: Small cars, big repair cost

By David Colmans

June 12, 2009 02:45 pm

— Buyers of very small cars have more to consider than just the price of the vehicle.
There's no doubt that times are tough. One way many people deal with this economic reality is to try and cut expenses, and that makes sense.
For those with low deductibles on their auto insurance, a reasonable way to cut up front costs is to increase the deductible on your collision coverage. The more you are willing to pay out of pocket if you have an at-fault accident, the less your premium payments because you are sharing more of the risk with your insurer.
Then, you might decide to downsize your transportation by purchasing one of the newer very small cars because they are maneuverable and they get great gas mileage.
The Insurance Institute for Highway Safety (IIHS) recently released a detailed study comparing repair costs of damage to the Smart Fortwo, the Chevy Aveo, the Mini Cooper, the Toyota Yaris, the Honda Fit, the Hyundai Accent and the Kia Rio.
The bottom line: Mini and microcar bumpers allow pricey damage, and none of the seven vehicles tested rated good (their highest rating), according to the IIHS. Just one, the Smart Fortwo, is acceptable for bumper performance. Five out of the seven earn poor ratings and one earns a marginal rating.
The worst performer is the Kia Rio with $9,380 total damage in the four tests, two full-width and two corner impacts, to earn a poor rating. The Rio's repair bill is worse than those of most other small and midsize cars and minivans the Institute tested. This minicar racked up about $3,700 in damage repair, or 30 percent of its purchase price in just the full-front test. The Toyota Yaris, Honda Fit, Hyundai Accent, and Mini Cooper also earn poor ratings for bumper performance.
The Smart Fortwo is best overall, with $3,281 total damage in four tests. Costs are relatively low for this microcar because its pre-painted plastic body panels are dent-resistant, inexpensive and easy to replace. The Chevrolet Aveo, a minicar, is next best, with $4,490 total damage.
So what's the big concern if insurance will cover all but the deductible?
Most auto insurers use a service from the same people who rate fire department classification for homeowners insurance, but for vehicles, the company develops number symbols based on several factors including "damageability" to assist them in developing the overall price for insuring a specific make and model of a vehicle.
For instance, the symbol for a base 2009 Chevrolet Impala is 13 while the symbol for the much smaller Chevrolet Aveo is 15. In basic terms, that means there is a higher concern for the cost of repairs for the Aveo than the Impala. Similarly, the Hyundai Elantra is 13 whereas the Accent is 16. The IIHS rates the Aveo as Marginal for front and rear bumper tests, while the Accent is rated as Poor.
As one might say, "So what?"
Good question. Here's more to consider.
A larger vehicle hits very small vehicle. What about passenger safety? Small vehicle is more expensive to repair than it should be.
Don't even consider the big crash, but think about low speed crashes where the damage is bad enough that you might not even be able to drive away because of the vehicle's design.
Regardless of state laws and insurance databases, there are still way too many uninsured motorists out there so even if you are not at fault, you will need more than just the state-required minimum limits insurance. You should also have uninsured/underinsured insurance or you are faced with the possibility of paying for the entire repair of your vehicle.
Finally, these cost issues are strictly for the repair of the vehicle. The driver has not yet been considered for insurance pricing. Teens and older drivers will pay more and anyone with a history of traffic crashes will pay much more than an accident-free driver.
Be careful not only with how you drive, but with what you drive.

David Colmans is executive director of the Georgia Insurance Information Service. Contact him at (770) 565-3806 or by e-mail at dcolmans@giis.org.

Copyright © 1999-2008 cnhi, inc.

Premiums Going Up?

Insurers Raise the Premiums on Term Life

Higher Rates Change Calculus of Buying Popular Coverage; Racing to Beat the Increase

By M.P. MCQUEEN

If you've been in the habit of shopping around for a new term-life insurance policy every few years, you may want to reconsider that strategy: After years of falling premiums, many insurers are raising prices on term policies.

Premium increases averaging about 5% to 15% started in January and are sweeping through the industry. One reason is that higher capital and reinsurance costs for insurance companies linked to tighter credit markets are making it more expensive for insurers to maintain needed cash reserves. Another is that insurers are receiving lower returns on their investments, putting additional pressure on them to raise money.

For consumers, that means the era of counting on lower rates five or 10 years down the line could be over for a while. It also means locking in premiums before they go up.

• 
  
  Steve Johnson, a 51-year-old business consultant in Lilburn, Ga., was trying to beat an impending price increase when he rushed in his application to online insurance broker AccuQuote.com for a new $500,000, 10-year term life policy from ING Groep NV's ReliaStar Life Insurance Co. in April.

But a series of canceled appointments delayed the necessary medical exam by several weeks, Mr. Johnson says. In the end, his application arrived a day late, and his annual premium rose to $864 from the $744 he had been quoted.

Unlike many other forms of life insurance, including "permanent" whole and universal life, traditional term life -- the least-expensive type of individual life insurance -- doesn't include a savings or investment component and pays a death benefit only if the policyholder dies within a specific time period.

"I think we have pretty much bottomed out on how low life-insurance [prices] can go," says Donald W. Britton, chief executive officer of ING's U.S. insurance division. ReliaStar and other ING subsidiaries are raising term-life insurance rates an average of 5% this year, Mr. Britton says, "primarily driven by our cost of capital, which is much, much more difficult to get and more expensive than it was a year ago and prior."

Other companies that have announced recent or impending price increases for new term-life policies include Prudential Financial Inc. -- which raised premiums an average of 4% for term-life insurance policies on May 1 -- and Lincoln National Corp.'s life-insurance-issuing units. American International Group Inc.'s American General Life Insurance Co. and United States Life Insurance Co. subsidiaries are raising rates by as much as 35% for customized "return of premium" term insurance, a spokeswoman says, but not for ordinary term.

Return-of-premium policies promise to return all or most of the premiums paid at the end of the term if the owner is still living and the policy is still in force. A relatively new product, return of premium has been gaining in popularity in recent years despite costing about 50% more than a regular term policy. Some insurers have said they plan to discontinue sales of the product. Return-of-premium policies now account for 5% to 10% of sales at AccuQuote, the company says.

Before the financial crisis erupted last year, term-life rates had been falling for two decades largely as a result of improved mortality rates and Internet sales. Premiums for costlier permanent insurance are also rising.

The Start of a New Era?

Economists and industry experts aren't certain whether the price increases mark the start of a new era of rising rates or are merely a temporary blip. Prices also rose shortly after Jan. 1, 2000, when most states imposed new regulations requiring insurers to keep larger cash reserves for longer-term level-premium policies. Many insurers raised premiums and some stopped selling 30-year-term policies after the new rules took effect. But prices for many new term policies rolled back again within a couple of years.

Robert Bland, CEO of Insure.com , a national online insurance brokerage, says more than three-quarters of the 30 companies whose policies his brokerage sells have already either imposed or announced impending premium increases for term life, and that he expects most others to follow suit by the end of the year. Premiums for some age and risk groups and policy amounts also are increasing sharply, he says.

One company, for example, raised premiums 57% for a $250,000 15-year-term policy for 35-year-old males in the best health class, but it raised premiums only 36% for a $1 million policy. The premium for the same male buying a $250,000 30-year-term policy from the same company increased 10%, but only 1% for a $1 million policy.

Not all companies have raised prices or have raised them uniformly, so it pays to comparison-shop. Northwestern Mutual Life Insurance Co., for example, hasn't raised rates, a spokeswoman says. Some other mutual companies -- those owned by the policyholders -- and publicly traded insurers also say they haven't raised rates.

In recent years, insurers also have been tightening underwriting requirements and taking a harder line on risk factors such as obesity and high blood pressure, industry sources say, prodded by tougher requirements from reinsurers.

Until several years ago, applicants might have been forgiven, say, a little extra weight and given a lower rate. That's no longer the case, says Dave Evans, senior vice president of the Independent Insurance Agents & Brokers of America. He says only 6% to 7% of applicants qualify for the very lowest rates.

Changing Buying Habits

Mr. Bland says consumers, conditioned by years of falling prices, may have to change their life-insurance buying habits. "A lot of people would think they could shop around every five years. That game is going to come to an end," he says.

Rising premiums mean there's less incentive to change policies often. Not only will you be older, but premiums may be higher overall because of market changes, and insurers may take a harder stance on your cholesterol or blood pressure than the last time you applied for a policy. If you think you need coverage for 20 years, you'd probably be better off now buying a 20-year level-term policy than buying a 10-year policy and thinking you will buy another one 10 years from now, Mr. Bland says.

Insurers generally won't raise premiums on a policy once they have received a completed application, so agents are urging shoppers to get new applications in quickly. The application process generally takes at least 30 days.

Do You Have a Cash Reserve?

Medical bankruptcy will still happen

Even with 100% medical insurance, medical bankruptcy will still happen. The report regarding the increase in medical bankruptcy only looks at one portion of the picture and that is the medical expenses that are not covered by medical insurance. [MPR News: Study: Bankruptcies linked to higher medical bills] These are items such as copays and deductables. Changing medical insurance so that it pays 100% will not eliminate bankruptcies.

The reason is that when a person has a serious illness or accident, he is not working and not receiving a paycheck. Without a paycheck there is no income to pay bills such as groceries, mortgage and car payments. Medical insurance does not pay these bills, so even with great medical coverage a person can still go bankrupt.

How many of us can live without a paycheck for a few weeks or months?

There is a solution and that is supplemental insurance from companies such as AFLAC. Supplemental insurance pays cash to the sick person. This cash can be used able to pay the everyday living bills.

The more complete answer to the elimination of medical bankruptcies is having enough money saved up to be able to pay all your bills, medical and everyday. Just changing medical insurance so that it pays all the medical bills is not nearly enough.

Marianne Goren
Shoreview, Minn.

Property Values vs Isurance Values

HOUSING SCENE

Don't reduce your property insurance coverage to reflect lower home values

Experts say it costs more to rebuild than it does to start from scratch, so the market value of a house doesn't indicate the amount of insurance you need.

By Lew Sichelman
June 7, 2009

Reporting from Washington -- There are a number of steps every homeowner should take to lower the cost of property insurance. But reducing the amount of coverage to match today's lower values is probably not one of them.

Because it costs more to rebuild than it does to start from scratch, the market value of a house is not a reliable indicator of the amount of insurance you need. Too little coverage and your policy may not assume the cost to return your place to its original condition if needed.

"There has been a lot of noise lately around market values, but market value and the cost to rebuild are two totally different things," said Elaine Baisden, vice president of national property for Travelers Cos., the Hartford, Conn.-based property casualty insurer. "So lowering policy limits could leave you underinsured."

Despite the downward spiral in housing prices, home repair costs increased nearly 4% nationally, according to Xactware, whose software products estimate building and repair costs. Marshall & Swift, an authority on building-cost data, says it can cost as much as 30% more to rebuild a house as opposed to building a new one.

Reconstruction costs are greater because the process usually involves the demolition and removal of damaged property. On-site mobility often is limited by the need to work around existing landscaping, power lines and other buildings. There are no economies of scale like there are when building row upon row of houses. Then there's the issue of newer, often more rigid building codes that might have to be met.

Market value, on the other hand, is often influenced by factors that have absolutely nothing to do with the cost to rebuild -- the quality of nearby schools, for example, the local tax base or the proximity to rapid transit.

Value also is affected by the cost of the land on which the house sits, and that is something you should factor in when considering how much coverage to carry.

Typically, the building lot accounts for 25% of a home's value. But you can get a better reading from your tax bill, which usually separates the value of the land from the value of the house. You shouldn't use the property's assessed value to determine how much coverage you need, but you can use the percentage ratio of the lot to the total to at least get an idea of what's needed.

Still, it's probably not a good idea to arbitrarily make these kinds of decisions without first sitting down with your agent and discussing your needs. The wrong choice could prove to be an expensive one, Travelers' Baisden said.

"Home insurance limits are in place to financially protect your family should something go wrong," she said. "If there's a fire or a significant weather event, you want to make sure you have enough coverage to rebuild your home in its entirety."

How to save

Here are some other steps you can take to save money while still protecting what may be your most valuable asset.

* Check your credit records. For years, insurers based their rates mainly on the location and age of the property and its distance from the nearest firehouse. Now, like mortgage lenders and other credit issuers, they "score" policyholders based on information in their credit histories.

It's a controversial practice, but insurers maintain that insurance scores are highly predictive of risk. Some use scoring only when other factors suggest that you are likely to file more claims, but others use it more extensively as both an underwriting tool and a mechanism for setting rates.

Whether you agree with the practice or not, it is important to pay your bills on time and make sure that there are no errors in your credit records.

* Avoid nuisance claims. The more claims you file, the more you are going to be charged, even if the claims are legitimate. So use your coverage for its intended purpose -- to protect against losses from which you cannot recover on your own -- and take care of the minor incidents yourself.

* Shop around. Prices vary from company to company. You won't be able to negotiate rates, but you may be able to lower your costs by comparison shopping. Premiums can vary substantially from one insurer to the next.

Although price is important, there are other factors to consider when choosing an insurer. You want a company that's financially stable, and an agent who takes the time to answer all your questions. And make sure that the company isn't prone to cutting loose anyone and everyone who files a claim.

You can check the financial health of the various carriers with rating companies such as A.M. Best and Standard & Poor's. To get an idea about service, talk with friends and relatives about their experiences, or consult consumer guides (such as Consumer Reports) that rate insurers every few years on readers' overall satisfaction with their companies.

* Raise your deductible. A deductible is the amount you pay toward a loss before your coverage kicks in. The higher the deductible, the lower the premium.

According to the Insurance Information Institute, an industry-supported nonprofit communications organization, bumping the deductible from $250 to $500 could cut your costs 12%. You could save as much as 25% by jumping to a $1,000 deductible, and up to 30% by going to $2,500.

But since you will be self-insuring, be careful. Don't go so high that you don't have the cash reserves to cover your share of the loss.

* Look for discounts. It may be possible to lower your costs by buying all your insurance from the same company. Some insurers will cut their premiums up to 15% if you buy two or more policies from them. But be sure that the combined price is lower than buying the same coverage from competing companies.

Other discounts abound. You may get a break of up to 10% if you're a longtime policyholder, say, for six years or more. And if you are over 55 and retired, you may qualify for a senior discount under the theory that since you're now home more, there's less chance of a major loss because you will be there to catch the fire or leak before it gets out of hand.

You usually can obtain a premium reduction ranging from 5% to 25% if you have protective devices such as burglar alarms or even deadbolt locks.

lsichelman@aol.com

Distributed by United Feature Syndicate Inc.