Does it seem like we’ve had more storms which have resulted in long power outages in the last couple years? I bought a generator several years ago when Ann & Hope was having a Going Out of Business Sale. It went without being used for 5+ years.  Then in the last few years I’ve really gotten my money’s worth out of it. I bought it because I remember my mother being stuck in the house alone for 5 days with no electricity after the Blizzard of 78. She kept the fireplace going, melted snow for water and used a gas grill outside to cook her food. Her efforts kept pipes from freezing and food from going bad; all with no insurance claim.

The change in weather patterns is a reality. From Hurricanes, to mudslides, to wildfires, 2017 was a record year for natural catastrophes. A prominent insurance industry organization known as AM Best recently said “the series of catastrophic losses in 2017 highlight the need to educate consumers about loss prevention activities to better protect their property, to get manufactures of household consumer goods to design products with limited power sources in mind, and for the insurance industry as a whole to better educate the homeowner to understand the concept of “assumption of risk” (which might be better identified as the role played by a deductible on your homeowner policy).

When was the last time a hurricane hit Rhode Island? Sandy in 2012 was not a hurricane when it hit Rhode Island. We got a glancing ‘blow’ from her and she had already been downgraded to a tropical storm.  She caused more than $11million in damage to Rhode Island with South County taking the greatest portion of that damage. While that will be the trend for most hurricanes effecting our State, don’t assume in northwest RI that we’ll be immune from the effects of a hurricane. Hurricanes are usually 75miles in diameter and larger. Rhode Island is only about 40 miles from its southern tip to its northern boundary. We may be less subject to ocean flooding but we won’t escape the winds and heavy rains when a hurricane hits.

June 1, is the official start of the Hurricane season and several reports have indicated that we should expect the Atlantic Hurricane season to be “average” to “above average”. If you look back at the history of hurricanes hitting Rhode Island we’ve averaged one nearly every 10 years. Sorry to be an alarmist but the last to actually hit RI was Hurricane Bob in 1991—that was 27 years ago; we’re historically over due.

With global warming having raised temperatures of the gulf waters, the forecasters are predicting more hurricanes are likely to trek further north. That is a trend likely to be experienced for the foreseeable future.  Will it increase our potential for a hurricane?

Most of us know of the flooding impact certain areas of Rhode Island have when we experience even an inch of rain. Now imagine 8-12 inches of rain. Add to that 75 mile per hour winds.  Now add another concern which being the number of trees that have circum to the adverse impact of gypsy moths, oak worms and carpenter ants. A friend of mine recently pointed out the number of dead trees lining RT 116 between the villages of Hope and North Scituate. I then took note the numbers of dead trees along Tunk Hill Road, Plainfield Pike, Trimtown Rd, Rockland Road, Routes 94 and 102. That’s just Scituate and Foster.  How many trees will fall in the next storm? How long will you be without power?

When you lose power what perils do you face that can lead to an insurance claim? In the winter months we focus our concern on loss of heat. In the summer, its trees falling on your property, damaged electronics due to power surges, and spoiled foods and basement flooding associated with loss of power.

After I read the AM Best article’s recommending that the insurance industry needed to educate the insurance consumer about “assumption of risk”, it seemed like the next trade journal I read was commenting on the number of insurance companies seeking rate increases this year in Rhode Island. The industry got hammered badly with an excessively high number of winter freeze ups in December, 2017 and January 2018. They got hit with Ice Dams in 2014 and an array of smaller storms that brought with them power outages over the last few years. The “loss trends” have been higher than normal. This is an industry that uses “analytics” to predict their costs for losses in a given calendar year. Analytics is the study of predicting the future based on fine tuned statistical data. It goes so far as to predict the likely hood of a broken pipe, a tree falling on the roof, or a furnace back firing. Despite all that data, weather throws the biggest challenge to their predictions.  But they do know how much they will likely pay out whenever there is a power failure that last two days, three days, four days,…

The insurance companies are redesigning their rating factors to specifically assign a rate to multiple factors. Soon they won’t be just looking at the age of your home, the most recent updates it has had, or the community’s fire protection rating. They will be looking at specific coverages such as “refrigerated products, or “Sump Pump failure“ and assessing it from one community to the next.  Those are two specific coverages you decide if you want. It is part of you selecting what portion of the risk you are willing to assume.  Now you can select a general deductible with or without a Hurricane Deductible. In the future you will likely be setting your deductible for an individual exposure to loss. It will be your enticement to take steps to prevent your potentials for loss.

When homeowners insurance became common place, it was used to protect against our major catastrophes. As costs continue to rise and rating structures become available to pick your individual coverage limits and deductibles based on loss exposure, we may find that consumers will return to seeking the basic insurance coverages and handling the small items themselves.