COMMUNITY VOICES: Insurance industry directly benefits our community
Deborah Allard | The Herald News
One window remained boarded up on this house in Swansea, bearing the names "Irene" after Tropical Storm Irene and "Sandy" for the Hurricane that just passed.
When disaster strikes in a community, insurance provides needed resources to help rebuild, relocate, and continue economic activity in the affected area. Whether the disaster is a tornado in some Midwestern town or a fire closer to home, insurance works “behind the scenes” with property owners, business persons and tenants so the entire community can move on and recover.
Consumers may find insurance overly complicated, and it isn’t a product or service that typically engenders enthusiasm among the buying public. Still, at the time of a claim the vast majority of policyholders are very happy to have the coverage. The J.D. Power and Associates 2013 Property Claims Satisfaction Survey showed that overall customer satisfaction with the property claims experience remains high, despite an increasing number of claims filed over the previous two years.
When fire strikes an apartment building, renters’ insurance pays the cost to replace lost furniture and belongings. In addition to payment for the destroyed belongings, tenants are insured for “additional living expenses,” which pays the necessary increase in living expenses incurred so that households can maintain their normal standard of living. This would include temporary lodging in a motel, the increased cost of meals, and other unusual but necessary living expenses. The community as a whole benefits because households are not forced to cut back on purchases or rely on governmental assistance during the very difficult reconstruction period.
Business owners are protected with similar benefits in their business insurance policies. Damaged property is replaced with new furniture and equipment, and stock is replaced to allow reopening as soon as possible. In addition to replacing property and stock, the business-interruption coverage in a commercial fire policy reimburses the business owner for lost profit and pays the continuing wages of employees affected by the temporary closure of the business.
This allows families who rely on their employment at the damaged business to continue their normal spending and investment activities, and minimizes the impact of the loss on the overall community. The business owner also uses the business-interruption coverage to continue making mortgage payments, or necessary business loan/lease payments while the business remains closed during the reconstruction process.
The combination of payments made to affected individuals and business owners in a tragic fire can easily total millions of dollars, even in a relatively small community like Fall River.
While there is a growing trend nationally for consumers to purchase insurance directly through online vendors, Massachusetts consumers favor their local agent by a wide margin.
A report commissioned by the Massachusetts Association of Insurance Agents (MAIA) and conducted by Towers Watson in November 2012 ranked Massachusetts first in the nation for consumer insurance purchased through local agents. The study found that the financial contribution of local independent agents to the Massachusetts economy was ore than $1 billion in 2012.