Higher premiums coming soon to a neighborhood near you....?

*Attention:  This blog is not intended to be a legal announcement or advance release of information about the potential impact of damages inflicted upon property owners by hurricane Irene.  It is not an announcement to my clients regarding their home owner insurance rates.  This is simply an educational blog intended to bring attention to the basic principles of insurance and risk management 101.  

Ok class... please turn your text book to page 101.... yes today we will be taking an in-depth look at the principles of risk management and how it impacts the insurance industry.   This past week you could not have made it through the week without the knowledge of the pending doom that hurricane Irene was about to inflict upon the eastern sea board of the United States.  I am not saying that the media every "over blows" a good story about a pending natural disaster... I'm just say in.... 

This story usually starts with an advance yet small mention of some type of "tropical depression" way out in the eastern Atlantic.... typically pummels a series of islands first, then threatens some resorts in the Caribbean  and then either continues in a north westerly direction OR a more direct north route along the east coast.  More times than not... it will clip the south reach of Florida and then pick up steam over the Gulf of Mexico and ultimately make land fall in the gulf coast as was the case with Katrina a few short years ago.  It seems that southern Florida and the Gulf have been the path of choice over the past decade and the east coast has been spared from the massive amounts of devastation and property damage.  Not this time. 

So... lets go to the first section of chapter one and discuss the principles of spreading the risk through the law of large numbers.  Simply put.... If we are a class of kindergartners who want to protect our favorite toy from damage caused by say fire, theft, or water damage... AND we all agree by contract to spread the risk of the $25 toy.... we all need to "pool" our resources in the form a a smaller "share or premium" to protect our toy.   So... we all pony up say.... $.25 to put into the pool and now we have basically started an insurance pool.  

Now... no doubt I have oversimplified the entire scenario... but even a cave man could understand this. ( I mean no harm or disrespect to cave men here... please forgive?)   From here with a pool of funding to protect the toy's we should be comfortable in knowing that we can play all day in the sun shine with little concern over what may happen to our toy's... right?  

Not exactly.  When the clouds gather and the wind picks up and the rain begins to fall... we have long since put that contract away.  Some of us are more organized than others.  Some have a system in place to keep their papers and records in a sequenced system.  Others... well they just have a pile of debris to plow through in hope that they might somehow find what they are looking for. 

Enter the storm.  

http://soundbible.com/1913-Thunder-HD.html

Now... this is no time to be worrying about the contract... or worse yet... trying to get a contract (policy). 

You don't get fire insurance when the smoke has already started AND you can't get wind and water coverage when the warnings are already posted.   Yet... time and time again... after the storm passes the media loves to get that sound bite of the person suffering from a loss with the inevitable statement of loss of everything... with no coverage.  

So... back to our simple example... when the creek is rising... should the simple example of toys at the playground covered in our simple pool feel secure?  Well.... that depends. 

Huhhh? 

Yes... it depends on the cause of the loss.  Remember...  the contract stated that coverage extends to the following perils: 

 "damage caused by say fire, theft, or water damage..."  

And... the contract states it covers the following property....

"our favorite toy..." 

Now the dust has settled and the sun has come out again.  It is time to settle up... turn in your claim... and get an education.   Enter the claim adjustment process....

So the questions we need to know are straight, to the point and simple.  Describe what happened?  What was the cause of the loss?  What is the damage to the property?  Estimate the cost to repair or replace... and then apply this to the policy language.... adjust the loss.... and settle up. 

Example A:  John had damage to his favorite football caused by Ralph.  Ralph is always doing things he's not supposed to do and pops the ball with a sharp stick.  Let's review the contract... Fire? no.... theft? no... water damage? no...  You make the call!  NO COVERAGE... ILLEGAL USE OF SHARP OBJECT... NOT A COVERED PERIL... REPEAT DOWN! 

Example B: Ralph decides to throw the ball into the fire pit (with fire burning brightly).  You make the call!  FIRE IS A COVERED PERIL... BALL DESTROYED BY FIRE... TOUCHDOWN! 

http://www.youtube.com/watch?v=cQOix-KidpY

The ball is covered and John receives payment for the loss of his football.  You get the idea.  Now... if how ever a large loss occurs to the play ground toys... say a rain storm caused water damage to 50% of all the insured toys in the insured group.... that would be considered a catastrophic event!  Why? 

We took in a small premium from a diverse group, however in this case the amount of loses will exceed the amount of premium we took in to cover the risk.  What choice do we have?  Either demand a higher premium from the group to cover the potential for future losses OR our small group will have to disband or in simple terms... we are broke! 

This story is really an over simplification of what the insurance industry is faced with after dealing with any large loss of property.  This year has been nothing more than "jaw dropping" when you go back and look a the volume of Catastrophic losses of property.   Yes... you may live in a neighborhood that was untouched by a tornado, hurricane, or flood.  The most common question we get is "why should I pay a higher premium for another guys losses"?  OR   "Why should my rate be effected by "their" loss" ?

Spreading the risk over the masses.  His loss this year may be your loss next year.  Insurance 101... spreading the risk.... sharing in the pain over the masses.  

Not saying rates will go up soon... but... be prepared and educated if they do...

http://www.donshermanagency.com/

   

Furniture Frenzey

Topic for discussion: Furniture frenzey

Your comments:

Ok... on the surface spending $200K on the furniture for the renovated library wing looks on the surface to be excessive and unnecessary. Until your in a position to shop and purchase these type of materials.... perhaps you should reserve judgement on the story.

I started my own insurance and financial services agency back in 1990 on shall I say.... a shoe string budget. Everything in my office was second and third hand however it got the job done. Over the years we have replace items as replacements became available... again on a very frugal budget. Luckily many of the items were very high quality... but came from liquidation at little or no cost.

Last year...after 22 years I finally determined I had earned the right to shop for some new items for an office expansion. I had access to "preferred" pricing through a major supplier chain that services our national brand. Let me take you through the items I purchased. 1 modest conference table, 4 cloth covered chairs and one modest credenza to provide over head and below level storage. I received quotes for this type of set up from several lines and settled on the lower end (green labeled) but still much nicer than anything I've ever had. The final tab: $5,500 after shipping and set up.

My point is that I don't see the real problem here in the actual expenditure for the items needed to make this a "World Class" library expansion. Does Detroit and the citizens deserve such a thing? Your damn straight they do! The citizens have been under served on almost every level for the past 50 years and it is my conclusion that they deserve a world class library.

Is it the best time to bang your drum over this expenditure? I don't think anyone intended on doing so... but since we are in an age of making a spectacle out of people in government more accountable for every dime they spend... then it sure makes for good news.

Here is the real story AND the mistake that was made. If your in a position to spend a large amount of money for a public improvement... and you happen to think about giving a family member or a friend a shot at the contract or the purchase of materials... the rule of thumb should be... don't do it! It is a CONFLICT OF INTEREST and will never look good when it comes out in the spin cycle.

Now... the young lady stated that she can't be held accountable for something else someone did in her

department. Again... if your in charge and it happens under your watch then it all falls in your lap. Sorry... you can't make the excuse that your not a hand holder. The buck stops with you if it falls under your responsibility. The boss has to take the hit. Bottom line!

• Go to referring article or post

Clash of the Ego's on WJR Radio 50,000 watt Blow hards....

Thanks for your comment Donaldman.
Here's the note you sent to The Detroit News:

Topic for discussion: Clash of the Ego's....WJR

Your comments:

Talk about the 50,000 watt blow torch... maybe they should consider changing that to the 50,000 watt blow hards! I have been a fan of WJR all the way back to my childhood when my dad always tuned into the JP show and Tiger baseball.... cannot forget patterns in music.

Things have certainly changed over the years in the broad cast media industry. Take a look at the line up from 5:30 am all the way to late night and what do you really have? Massive...arrogant... heavy lean to the right... EGO'S. My first surprise is that the broad cast booth was big enough for both gigantic heads to fit into the same room.

Both Beckman AND Albom have forgot where their humble beginnings started...sports jockies who really accomplished nothing on any field of sports and ended up as critics and analyzers of games they never excelled in themselves.

Now... sitting in their protected little glass houses they can spout away about any topic they choose...AND as all radio, TV, and even print journalist can do... they have the final word. Let me give you an example. Take Rush Limbaugh for example... he is very controlling over every second of what is broad cast over the air waives... he carefully screens every one who HE chooses to come on the air... AND

then controls the tone and direction of the carefully chosen guest to his advantage and point. That is called manipulation and control of the proposed outcome. They have the ability to press the mute button at any time, over ride the conversation to make their point and can make the guest appear foolish or inept by adding back ground noises and such to hammer home their spin controlled message.

Put two people in the same booth who are used to controlling the outcome... take away their tools of advantage with removing the controls... and you have basically a celebrity death match in the making. If I were to bet on that match I would say advantage to Albom. Although Beckman is probably larger in stature and has a much bigger mouth....Albom has the unusually large cranium and could probably head butt Beckmen to death.

Funny that Albom is still around since he is the only lefty on the air at WJR... I have become so tired of the talking heads that beat the same drum over and over that I can no longer drink from the Righty cup. It has become so full of bitterness and poison I have chosen to go with a secret that few are aware of... It's called the off button! Try it sometimes and enjoy the sounds of.... well silence. It is a real treat to have in the world of non stop media buzz. Funny though...even your smart phone will try and steal that from you with every Facebook post trying to tempt you away from your moment of relaxed silence.

• Go to referring article or post
• Go to the forum

Detroit new article on new restrictions on Level 2 and under drivers.

Det News new restrictions for Level 2 and under drivers.

Not everyone likes the idea of more laws to protect us from ourselves.  However, when it comes to this new legislation designed to protect our children... I'm all in.  I can hear it already... (and have) from the people it effects... our kids behind the wheel. 

For some reason we as adults/parents always measure the present by what we experienced in the past.  The conversation of things like.... safty belts in cars, bike helmets, car seats and a long list of other issues rises to the surface.   Why do kids today need all these laws to protect them from things that... well.... we survived.

Bulls eye... center of target!  "We survived".... which then you have to ask yourself the logical question of what happened to those who didn't.  Really the fundamental laws of the balance of nature playing itself out right before us.  Yes... there are people who discovered that by strapping a helmet on your head while riding down a hard surface can protect the rider from a "closed head" injury or even death.   Can you imagine not putting a baby or small child into a vehicle without a car seat?  Just one generation ago that was not the case.  Can you remember seeing a child spread out on the rear dash of the car in front of you?  Or... do you remember the station wagons with the rear facing seats?  Don't see those anymore do you? 

To the point... for some reason a generation ago... we as new drivers understood the basic principles of driving just as well as (if not at well) as children of today.  However... now we can have the conversation of:

we DID NOT have the following to distract us....they were not yet invented for the common folk:

cell phones, the Internet, IM'ing, texting, cable TV (remember we had 2,4,7,9,20,50,56, and 62), no GPS, On Star, Facebook, Twitter, YouTube.... you get the point?

For what ever reason... today when you get more than a teen driver and one passenger in a vehicle after the hours of 10 pm and 5 am... the risk of something bad happening dramatically increases.   Why?  Call me silly for saying so... but we have too many things via for our attention. 

From my 20 years of experience in the insurance industry I can tell you that distracted driving is for real.  Not just for teens but for everyone of us.  My cell phone is calling for my attention even now as a write... buzz, buzz,  look at me.... Facebook update.... Buzz,  Buzz,  a text has arrived.  I'm distracted sitting in the chair right now... not even operating heavy machinery! 

So... when your kid complains about the new law... tell them... like taking medication for a cold... it doesn't always taste good... but it is good for you! 

Visit our web page at www.donshermanagency.com for more links to more information about teen driving and discounts available for teen drivers who complete our Steer Clear program.  Discounts are available for students who carry a 3.0 or better.  These discounts can significantly reduce the premiums you pay for car insurance now... and after your graduate.  Safe driving and good grades pay!   

 

Opening Day....

So the annual event has arrived.... the official opening day for firearms deer season.  Time to head to the woods for a chance encounter with what Mother Nature has to offer.  I have to admit.... I am not a hunter... was not raised in a hunting family... unless bagging the best price at K mart is considered hunting!   I love the out doors and especially appreciate the many acres of state land available for our enjoyment.  In fact.... the Bald Mountain Recreation Area is right out my window.  I appreciate all that it has to offer and have even really just now began to appreciate the shooting range.

I recall when we first visited the home we have lived in for the past 16 years that it really wasn't anything at all like what we had on our "must have" list.  We started out with a vision of a 5 acre parcel with a cape cod style house in the Oakland Township area.  Sure... there were some homes that fit the description... but were slightly out of our price range... not really by much.  But... the common thread in each that we found were that they were nothing at all like what we visualized... and were all major fixer uppers. 

Ultimately after turning over every stone that fit the bill... we changed the bill.... and ended up where we are at today.  Not a cape cod,  not 5 acres... but unique and distinctive in it's own way.  I remember looking out the second floor bedroom window (which by the way were all in need of replacement!) and looking out over the sun settling over the acres of trees and wet lands of the Bald Mountain South Unit.   If you set just right... you don't even notice the neighbors house across the street that separates us from the park boundary.   In a sense... this place gave us much more than the 5 acres could have ever given us and with much less in the way of maintenance.  Just a short walk down the street and into the park along with all that it has to offer.   You really can't beat it.  

One thing we did overlook and missed in the timing of our visits is the Bald Mountain Shooting range.  In our visit later in the day I think in late August or early September we heard the birds singing and that was pretty much it.   It is possible that there may have been some distant occasional ring of a shot gun or hand gun... but not enough to really take notice of.  We moved into the home in December and again... the quite and solitude of early winter... pretty quite.  It probably didn't really become an issue for me at all since I am up and out early and return later in the day after the close of business.  But... for a new mother at home with a new baby... the coming of spring... brought the realization that there was something going on over across the woods that picked up in intensity as the weather began to break.  The gun range became a source of continual noise that broke through the peaceful early days of the new spring.   Funny thing though... after the first year... it became really nothing but back ground noise. 

We adapted to the eb and flow of the range just like some in the city tune out the sounds of the city.   It really only came up again when we had a visitor that would ask about it.  Doesn't that bother you?  Aren't you worried about a stray bullet?  No... you get used to it... and they really have controls on the direction and do a really great job keeping things where they belong. 

The shooting range just went through a major renovation this past year.  That's a good thing... because it means that there is value in the range and people enjoy using it.  With few dollars available these days for State Parks it was really a blessing to see an investment of new dollars into the
Bald Mountain Park.  I figure this is a good sign and look forward to being able to apply for the new State Park License plate pass port in the coming year.     http://www.michigan.gov/dnr/0,1607,7-153-10371_10402-234660--,00.html   

For $10 you now have complete access to the best of what the Michigan State Park system has to offer... and don't have to worry about finding a ranger available to sell you an annual pass.  I can't wait to get mine as I think it's the best $10 you'll spend this year.  Hey... can't you deduct the cost of your tabs?  Better ask a CPA that one!

Wrap your head around roundabouts | detnews.com | The Detroit News

Wrap your head around roundabouts detnews.com The Detroit News
I found this article on detnews.com this morning and thought of how it related to the visitation of Dan Burden http://www.walklive.org/?page_id=17 over the past two days in Oxford, Michigan. Many of you know that I serve on the Down town Development Authority Board and Chair the Economic Development and Restructuring Committee for the Village of Oxford. The development of our Village is a work in progress. Many who have served on various Boards and committees have long been talking/visualizing one of our Villages blessings ad curses, M 24.
The blessing is that we have what many are trying to create in a historical downtown street scape. We have iconic buildings with unique character that cannot be duplicated in a Mc-mall drawn up on a board with fake facades made to look, but can never feel like what we have. Why? because you cannot put the heart and soul into a Mc-mall. When you closely examine it and touch and feel it.... knock on it.... you hear and empty "ping" because.... it has not heart and soul.

After meeting with Dan Burden I can attest to a man who has heart and soul. Just take one look at the larger than life smile and a mustache that is unique to.... well Dan Burden (some from the Village would argue Dave Baily is a close match!). This past week was an energy overload for our Village. We started out the week with a DDA Board meeting, moved up on the calender to coincide with our Main Street Evaluation by the Oakland County Main Street Evaluation Committee. This is a highly coveted recognition that many towns and villages across America are reaching toward gaining that recognition http://www.oakgov.com/peds/program_service/main_street/mainstreetoc.html .

This does not happen by osmosis or good luck. Recognition like this comes from good old fashioned hard work with volunteers pulling the load. People who reside in the Village of Oxford need to know that they are blessed. Why? Dan Burden commented on several occasions about the energy level and excitement level he felt over the time he spent with community leaders and volunteers over his stay. Dan even commented on an example of how this phenomena works making reference to a TED.com video demonstration I will try to paraphrase. Imagine a group of people on a hill... kind of like Pine Knob at a concert.... and one person gets up and starts to sway and dance to the music.... another person joins in.... and then another.... and another.... and eventually everyone... even the rhythmically impaired join in. The revelation is in that it is not the first in leader that is the key to this but the first to join in that creates the sense of "courage" to join in the dance and the wave follows. I'm thinking this is a similar situation to pop culture things like spiked mow hawks, ear rings for men, nose rings, belly rings.... uhhhh.... lets stop here?

My point to all this is a call to all to look around and see what positive things are happening in your community.... join in the dance... if you don't have a lead dancer.... start dancing... you might feel funny or foolish at first.... but don't be afraid..... START DANCING!

The evaluation committee gathered with the DDA Board and community leaders and gave us their verbal report findings. You might think I'm going to go one to tell you how perfect we are in every way? WRONG! Good news is that we received good , but can use improvement in almost all categories. The formal written report will be synthesized and made available to the community in a few short weeks. So... that is good news because isn't that what life is really like? Aren't we all really on a "needs improvement" program? My wife and kids tell me this often (JK!)!

I cannot close out without mentioning that Dan Burden met with over 50 community members and gave us a presentation that left us all with a real vision of "Yes... this can be done..." as opposed to some that have said "No.... we've already looked at that... It can't be done..." . It reminds me of those pictures we were shown as students in Psych 101 class... what do you see here? Do you see the beautiful women? Or do you see an old women with a large nose with a big wart on the tip? Glass half empty or half full?

My personal favorite (remember I'm a science teacher at heart!) part of the day.... a demonstration of the brand spanking new LED downtown street lighting retro fit designed, made and installed by Relume Technologies http://www.relume.com/ of Oxford Michigan. Wow, high tech, low energy use, state of the art , made in USA, made in Michigan, Made in Oxford! The representative from Relume pulled us up to his vehicle, pulled up a program, clicked a couple of buttons... BAMM... entire street lighting goes to 50%.... Click.... slowly... in theater mode.... back up to 100%... clear focused.... lower energy use, less maintenance, efficient lighting. He continues on to say that each light has its own id (name) and they can do things like knock off every other or 2 of 3 lights in late night/early pre dawn. That makes sense... we shut off our lights before hitting the sack... right? Why not at least knock them down a few notches and save a few bucks on the electricity bill? Now... I though I heard him say... and I don't want to make any promises or over state this... but he did say something like "We can even sink these lights to music...." Excuse me?? Did you say you can make these lights go with music? Are you kidding me? You've got DDA people standing on the street looking at these new lights and thinking.... Rochester... we love your Christmas light display and all.... but... you can't touch the sugar plumbs dancing in our heads right now. I mean... dancing lights?

Stay tuned!

Walk-able, welcoming downtown Oxford Michigan

Have you ever noticed how much traffic controls the feeling you get for certain places you visit?  When you visit a town what are the things that really count to make you a repeat visitor?  Is it the selection of stores or restaurants that attract you to come back again?  Here in Oxford Michigan we have a pretty good vibe going on for the past several years.  It has been growing and gaining momentum.....even defying the poor regional economy.   This past year we regained our "Main Street Accreditation" from Oakland County and in fact are up for review again tomorrow.  I am confident we will again keep that and perhaps gain more attention for the good things going on in our once sleepy little North Oakland County community. 

What starts the wheels of progress for a town?  Why do businesses want to locate here versus the next town over?   It seems that this might be the movement away from the desire to shop and dine in an indoor mall setting.  Statistics show that the once coveted indoor mega malls are being passed over for the new trend in the out door, walkable , upscale shopping experience.  I have come to the conclusion that mall developers are really trying to create what we already have.  Think of it as a design studio that takes a blank sheet of paper (empty land space) and attempts to create a fantasy version of the down towns of old.   Store fronts and facades designed to look and attempt to feel like the days of yesterday.    So the question you have to ask yourself is why do major retailers fall for the designer replica when they can have the real thing?

Think about it... we have the old store fronts.... with many new facades that have been updated with incentives provided by grants from the Oxford Downtown Development Authority.   Take a look around town and you will see major renovations (keep it in prospective as "major" defined by a small town) being encouraged with DDA facade grants.   Our stores have the squeaky floors and unique architectural components you will not find in any Mc-Mall. 

We have just compleated a major rebuilding of our parking in the four quadrants which should give us a one up on the malls or other towns with parking space problems.  It is amazing what you can do when you get the opportunity to revisit the use of the space.  The bottom line in my opinion is that this is in fact economic development.   Adequate parking may not get modern shoppers excited... but it does mean a lot that it is available, well lite, well striped, AND convenient.  Consider the mid December visit to the local mega mall.  In years past you had to troll around hoping for an opening and in many cases you'd have to pull up on a section of the lawn.   Now... visit a town like Oxford and you will have a short walk... but typically a pleasant walk in an area you know has "character" and lots of history.  Think of it as "distressed" furniture!  Over time we begin to value those little dents and bumps in the street scape... because it feels familiar and comfortable. 

Tomorrow we meet with world renowned guru of walk-able streets in Dan Burton.  He will be here walking our streets looking the one thing most of us here in Oxford have wanted for a long time.... the one thing that has eluded us for 3 or more decades now.... the taming of traffic on M-24... or Washington Street as we call it in the Village.   What is the problem you say?  Why does a piece of road cause you fits?  Imagine moving 60,000 cars, trucks, gravel haulers and motor cycles every day through the middle of one of the "fake main streets" I mentioned earlier.... and now you start to get the picture.  Seems pretty silly doesn't it?  But.... that is the reality. 

Our goal is simple... it is not to create a "bypass" or move people around town.  It is really an issue of taking a look at a plan that was set up long before this down towns current state of vitality.  Then the goal was simple... move traffic through town as quickly and efficiently as possible without interruption.  What does that mean for the pedestrian or non motor vehicle mode of transportation?  How about skip the visit to the spa... standing on M-24 during peak traffic provides a free skin exfoliation compliments of the sand kicked up by the trucks and traffic zooming past! 

So... we begin with turning the model around and looking at pedestrian safety and alternate non-motorized modes of transportation first... and movement of traffic as an important... second.  The buzz words here are "traffic calming" and "walkabililty".   The reality is that this means different things for the variety of people who need to walk safely up, down, and across our busy streets.   Consider the cross trip for an elderly or wheel chair bound pedestrian compared to a youngster on a bike or skate board?   What can we do to facilitate the needs of all types of walking abilities? 

I surely look forward to the meeting tomorrow as I truly believe that this is the next big thing in the development of our down town.  Stop in and visit tomorrow evening over at the new Oxford Community Schools Offices in the North East quadrant.  I believe we get started around 6 pm.