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Ultimate Guide to Understanding Auto Insurance

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When it comes to auto insurance, there are a lot of companies and coverage choices. How do you know who to trust and what’s essential? Some of the insurance terms like endorsements or comprehensive and collision coverage may also be a bit confusing. And what about those extras you can add on? Which ones do you need?

We’ve pulled together some of our best resources to make the experience of shopping for auto insurance easier. We’ll explore the ins and outs of coverage and what you should consider when buying or renewing your auto insurance policy.

Finding the auto insurance coverage that’s best for you
Whether you’re buying your first set of used wheels or a brand new car, you’ll need protection and service. Auto insurance kicks in for those unexpected mishaps—from a minor dent to a more serious crash. It also helps protect you, your passengers and your pets as well as some of the prized possessions being transported in your car.

Understanding auto insurance terminology
With coverage, you may wonder about some of the terminology used in your policy. Here are four common auto insurance terms and what they mean.

Exploring coverage options and additional protection worth considering
Almost in the same way that you could customize your car or truck, you can customize your auto insurance coverage. For instance, you may want to add emergency road service or rental car reimbursement coverage to your auto policy. The extra services do not cost a lot, and you’ll be glad to have them when you need them.Here’s more information about some of the options.

To review your current coverage, get in touch with an insurance advisor. Every Erie Insurance auto policy comes with a local insurance agent who will give you that personal touchcoverages you need and nothing you don’t, all at a great price. To get an insurance experience that’s personal, fair and affordable, contact an ERIE agent today.

Harvey’s Catastrophic Flooding Hits Uninsured Hard

Hurricane Harvey’s second act across southern Texas is turning into an economic catastrophe – with damages likely to stretch into tens of billions of dollars and an unusually large share of victims lacking adequate insurance, according to early estimates.

Harvey’s cost could mount to $30 billion when including the impact of relentless flooding on the labor force, power grid, transportation and other elements that support the region’s energy sector, Chuck Watson, a disaster modeler with Enki Research, said in an email Monday. That would place it among the top eight hurricanes to ever strike the U.S.

Less than a third of Harvey’s losses are likely to be insured, Watson said.

“A historic event is currently unfolding in Texas,” Aon Plc wrote in an alert to clients. “It will take weeks until the full scope and magnitude of the damage is realized,” and already it’s clear that “an abnormally high portion of economic damage caused by flooding will not be covered,” the insurance broker said.

Many forecasters were hesitant over the weekend to make preliminary estimates for how much insurers might pay. Researchers were shifting from examining Harvey’s landfall Friday as a roof-lifting category 4 hurricane to the havoc it later created inland as a tropical storm. Typical insurance policies cover wind but not flooding, which often proves costlier. Blaming one or the other takes time.


On Aug. 26 NASA-NOAA’s Suomi NPP satellite captured a visible image of Tropical Storm Harvey over Texas.
Credits: NOAA/NASA Goddard Rapid Response Team


In the Houston area, rainfall already has surpassed that of tropical storm Allison in 2001, which wreaked roughly $12 billion of damage in current dollars. In that case, only about $5 billion was covered by insurance, according to Aon.

Those storms are dwarfed by Hurricane Katrina, which struck in 2005 and devastated New Orleans. By some estimates, it inflicted $160 billion in total economic damage. About 47 percent of Katrina losses were covered by the insurance industry, but only about 27 percent is expected to be insured for Harvey, Watson said.

Most people with flood insurance buy policies backed by the federal government’s National Flood Insurance Program. As of April, less than one-sixth of homes in Houston’s Harris County had federal coverage, according to Aon. That would leave more than 1 million homes unprotected in the county. Coverage rates are similar in neighboring areas. Many cars also will be totaled.

“A lot of these people are going to be in very serious financial situations,” said Loretta Worters, a spokeswoman for the Insurance Information Institute. “Most people who are living in these areas do not have flood insurance. They may be able to collect some grants from the government, but there are not a lot, usually they’re very limited. There are no-interest to low-interest loans, but you have to pay them back.”

The federal program itself is already struggling with $25 billion of debt. The existing program is set to expire on Sept. 30 and is up for review in Congress, which ends its recess Sept. 5.

Investors Brace

Costs still will likely soar for insurance companies and their reinsurers, biting into earnings. As Harvey bore down on the coastline Friday, William Blair & Co., a securities firm that tracks the industry, said the storm could theoretically inflict $25 billion of insured losses if it landed as a “large category 3 hurricane.”

Policyholder-owned State Farm Mutual Automobile Insurance Co. has the largest share in the market for home coverage in Texas, followed by Allstate Corp., which is publicly traded. William Blair estimated that, in that scenario, Allstate could incur $500 million of pretax catastrophe losses, shaving 89 cents off of earnings per share.

Investors began bracing for losses last week. But many didn’t believe that Harvey could wipe out bonds that were issued to protect insurers against storm damage in the region, according to Brett Houghton, a managing principal at Fermat Capital Management. His firm manages more than $5 billion, with allocations to catastrophe bonds.

The Swiss Re Cat Bond Price Return Index dropped 0.44 percent in the week ended Aug. 25, the steepest decline since January. The benchmark is recalculated every Friday, so it’s unclear how the debt performed as the storm continued through Sunday. Reinsurers, which provide a backstop for primary carriers, also may get burned. That group include Bermuda-based companies Arch Capital Group Ltd., Axis Capital Holdings Ltd. and RenaissanceRe Holdings Ltd., according to a note last week from Meyer Shields, an analyst at Keefe, Bruyette & Woods.


Interrupting Business

Businesses are probably better covered than individuals. Companies across the retailing, manufacturing, health-care and hospitality industries will be seeking reimbursements from insurers for lost revenue during the storm and subsequent repairs, said Aon’s Jill Dalton, who helps manage claims.

But for Texas’s massive energy industry, it’s still too early to project how badly the storm will disrupt supply and distribution. That’s because the devastation keeps spreading.

“If it continues to rain, I just don’t think the situation is going to get better any time soon,” said Rick Miller, who leads Aon’s U.S. property practice. “In fact, it could get a lot worse.”


By Sonali Basak | August 28, 2017


The Wild World of Weather Forecasting


 The weather might be the single most common topic of conversation. That’s because if there’s one thing everyone suffers through and enjoys together, it’s the weather.

We talk about the weather because it affects our daily mood—and because it's so difficult to predict. From memorable rhymes like, “Red sky at morning, sailors take warning, red sky at night, sailors delight,” to advanced computer-modeling systems, people have been searching for a more perfect method of predicting the weather since the beginning of time.

Today, with concerns about global warming and an increasing number of extreme weather events throughout the world, the topic of the weather and how to predict it has found itself in the spotlight. In this series of posts, we’ll explore some of the most relevant and interesting aspects of weather prediction.

  • Weather Forecasting: Art of Science?: In this post, you’ll learn how everyone from ancient Greeks to modern scientists attempted to predict the weather throughout the years.
  • The Limitations of Weather Forecasting: Who hasn’t been thrown off by a forecast that misses the mark? In this post, we’ll look at why the forecast can be wrong in the face of so much technology and to what degree this advanced science is still an art.
  • What About The Old Farmer’s Almanac?: As the oldest continually published periodical in North America, The Old Farmer’s Almanac is a yearly treasure trove of astrological tips, gardening advice, tide tables, planting schedules and, of course, weather forecasts. We’ll take a look at the role this longstanding publication has had in predicting weather patterns and whether or not modern forecasters think it has any credence.
  • Making Sense of El Niño and La Niña: Like two mischievous siblings, these two weather systems are notorious for causing confusing weather patterns. Learn more about them and gain some insights into how they’re playing out this year.
  • If you've ever wondered why some years it’s warm in December instead of cold or if you’ve ever been frustrated by a forecast that misses the mark by a long shot, these posts will provide a fun and fascinating look into all things weather related.

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