Over the last week, the international headlines have been dominated by the disaster in Japan. First came the earthquake registering 9.0 on the Richter Scale. This makes it one of the most severe earthquakes since accurate record-keeping began. Then came the tsunami. With only minutes, there was no evacuation. Instead, a wall of water some thirty feet high, swept everything in its path to destruction. Now we watch as Japan struggles with a nuclear disaster in one of its major power stations. At times like this, our hearts go out to the survivors. It’s one of the worst tragedies in a developed economy for the last ten years. But this is not just a time to reflect on how fragile the Earth is and how easily our civilization can be disrupted. We must also look to home and review the preparations we have made should there be local problems.

The West coast sits on the Pacific Ring of Fire and, at some point, there may be a major quake affecting California. We should wonder whether the nuclear power plants in the areas most at risk will fare better than those in Japan. Southern California proudly boasts the design for the San Onofre Plant will survive a 7.0 quake. As a word of explanation, every change in a whole number, say from 7.0 to 8.0 means the quake is ten times as strong. It would not hurt to look carefully at the safety issues at all plants close to areas at risk of a quake. Continue Reading

Let’s start off in New Hampshire. The first question is whether the design standards in modern vehicles make annual safety checks unnecessary. If you said, “yes”, you are with the thirty states that do not require any safety checks. The theory seems to be responsible drivers maintain their vehicles and are not a hazard on the roads. If there’s an accident, they pay more for their insurance – it’s a stick and carrot approach to social responsibility except it forces up the premium rates for all drivers. In states where there are annual checks, vehicles are better maintained, there are fewer accidents, and drivers pay lower rates. New Hampshire has just decided to move from one to two-year inspections. Now there will be thousands more vehicles on the road with poor brakes and defective front ends. Guess what will happen to the premium rates.

In Mississippi, there’s a bill to enforce the mandate by requiring drivers to produce proof of insurance before the tax collector issues a tag. Governor Haley Barbour is currently considering whether the new database will be open to the police to check the status of all drivers. If he does sign this bill into law, it will potentially reduce everyone’s insurance premium rates. The more people are forced into paying for the basic minimum liability policy, the less the law-abiding people will pay. Continue Reading

What’s in a word? Well, perhaps in this case, it’s the difference between insurance cover and no cover. Let’s start with the straightforward version which we might call a motor scooter. This is a two-wheeled, low-powered version of a motorbike and, despite very real safety concerns, their number has been growing steadily on our roads since we broke through the price barrier of $3 per gallon of gas. The reason is simple. It’s not difficult to get 60 or more miles to the gallon on a scooter. That’s rather better than the average vehicle. Add in the fact you will also save dramatic amounts on the auto insurance and it looks a good deal. The only problem is the number of accidents. Drivers seem to have great difficulty is actually seeing these nippy little things as they whizz in and out of traffic.

Changing the subject, you can’t avoid knowing we are facing an epidemic of obesity. Perhaps equally as serious is the increasing age of the population. As the boomers steadily pass the 60 mark, the average age is rising quite sharply. Those who work out these math sums tell us that, by 2025, there will be 66 million people aged 65 or more. Now let’s put together the picture by adding in the number of people who are born with disabilities or who are injured and therefore cannot walk around so easily. One of the things we pride ourselves on as Americans is our inventiveness. Knowing how many people might find it a challenge to move around the home or outside, there’s been a rush to develop scooters (for the record, the general term is an “electric mobility device”. They now come in a fairly standard four-wheel form, rather like a slimmed down golf cart and, in increasing numbers, you’re likely to see them on our roads and have to move out of their way on sidewalks and cycle paths. Continue Reading

Insurance is a rather simple form of gambling. The insurance company offers odds on the different ways you might suffer a loss. You can place a bet and, if you suffer the loss in the predicted way, you claim your “winnings”. Well, that’s changing the words around to make you think, but the spirit of this is correct. It all comes down to the ability of the insurer to predict how many people will lose money and how much they will lose. The total amount plus a margin to cover administrative costs and provide a profit, is then divided among the policyholders as the premium. So why should the insurer give you a discount? The answer comes down to those predictions. If you do something to change the odds on you losing money, the insurer rewards you.

Take something as simple as a fire alarm. They cost very little to install and maintain. Yet, if smoke is detected early, you can either put out the fire before it has a chance to take hold, or you call in help before your home burns to the ground. So a small investment earns a big reward. Now add in another fire-related variable. Did you have the good sense to buy a home close to the fire department? If so, your rate will be lower than for the people who decided to live somewhere off the beaten track. Even if they have early warning from an alarm, it still takes too long for a tender to arrive. Now what about the cause of the fire? Old homes have bad wiring that often causes fires. Get a certified electrician to make your home safe and you earn a discount. Similarly, new pipes don’t leak and properly maintained furnaces don’t catch fire as often. Continue Reading

In offering advice, there’s no point in complaining about the way the system works. All you can do is explain what insurers do and then suggest the best way of trying to deal with it. For better or worse, insurers take your ZIP code into account when setting the premium rates. For a moment, let’s say a word in praise of California. In 1988, Proposition 103 forced insurance companies to place more weight on your driving safety record, your years of driving experience, and the number of miles you drive every year than any other factor, including the ZIP code. Breaking the linkage between premiums and the ZIP code still took years – the insurers fought tooth and nail to prevent implementation of the Proposition. But it is now in force and Californians benefit. Shame about the rest of America where the practice of redlining continues, affecting not just insurance but banking and, even, where shops choose to locate or deliver to. That this is racial profiling under another name is ignored.

We now come to the difficult part. Neighborhoods get a bad reputation for a number of different reasons. In this case, it’s not so much the why as the result that concerns us. Those that can, move away to a “better” area. This is great for those individuals but it accelerates the downward trend of the area. The only ones left behind are those who cannot move. The tax take drops. Local services suffer. A ghetto is born. So, if you are a renter, can you afford the rent in a ZIP-code area with lower insurance rates? It might be worth paying a bit more on the rent and saving on the vehicle insurance. You come out even on the move. If you own or cannot afford the rent elsewhere, can you afford a lock-up garage in a better ZIP-code area within easy walking distance. Although walking is not usually considered the best way of getting around a city, this may save you money. Continue Reading