Florida Insurance Network

I found a great idea inside this report about using green building retrofits as a means of economic recovery. This could be just what the doctor ordered in a world of 12.5 unemployment and nightmarish property values.

This report is encouraging for several reasons (and it makes me feel better about voting for Obama) but what particularly excites me is where it discusses PACE (property assessed clean energy) financing for green retrofits.

We’re talking about solar water heaters, photovoltaic generators, high-efficiency cooling systems and so on and so forth. These things aren’t cheap but the money they save by reducing energy consumption adds up to a whole lot more. In fact, according to this study, the savings can total between 10 and 50 percent, and sometimes more.

We installed a solar domestic water heater at our house about a year ago. The $1,500 federal tax credit, along with $450 from Progress Energy, tipped us in favor of the idea. That utility had just socked us with a massive rate increase and we decided we would rather avoid that cost over the long run and temporarily pay it in the form of monthly payments on the credit card to which we charged the cost of the solar unit. We also expect the unit to help us avoid the impact of future electric rate hikes. We all know they’re inevitable.

The problem these days is credit-card and home-equity lines aren’t as common or as ample as they used to be. So, as a practical matter, the cost of many green retrofits is just downright prohibitive for a sizeable chunk of the prospective market. And that’s doubly true, if you’re likely to move before you recover your investment.

PACE programs are designed to literally change the equation by providing low-cost capital to homeowners, who then repay it as part of their city or county property tax assessment. Among other things, this ties the investment to the property, not the individual owner. That makes a hell of a lot of sense because the benefit of the investment accrues over time. If more than one owner is going to reap the rewards of lower energy costs, it makes perfect sense to allocate the initial investment on that basis. That’s what PACE does, among other things.

The U.S. Department of Energy has $3.1 billion in economic-recovery funds available to fund city, county and tribal PACE-style programs. As of October, the department had received just $81 million worth of applications. That means there’s still plenty left for greater Tampa Bay.

It seems to me that some forward thinking local-government types could do a whole lot of good by grabbing as much of that money as possible, and encouraging local property owners to take advantage. In fact, if they got real creative, these local heroes might even succeed in leveraging private capital to expand the pool of available funds for green retrofits.

The result would be more work for local contractors and their employees. That has to be a good thing in this stinking, rotten economy with 12.5 percent unemployment. What’s more, the value of property improved is bound to stabilize or even increase over time.

Think about it. What buyer with an iota of common sense wouldn’t pay more for a property that costs 50 percent less to operate?

See Elroy for details about premium discounts for parachutes.

I read here where some MIT-trained engineers have a company that makes a flying car.

Writing for Insurance Networking News, Ara Trembly sees big headaches ahead for the insurance industry as it grapples with how to insure this vehicle. Is it an aircraft or a car? Do you need both car insurance and airplane insurance? And what if it crashes on landing? Is that a car wreck or a plane crash? All good questions for the flying-car market, I agree.

If you ask me, though, Terrafugia’s Transition isn’t the vehicle that’s going to drive insurance carriers up an actuarial wall. The Moller M400 Skycar is. That or the Nuera. Or, maybe even better, the Macro Skyryder X2R. Welcome to The Jetsons. For real.

We’re talking flying cars, so that makes me an expert as much as anyone. And, in my expert opinion, the Moller is light years ahead of that VW-Bug looking thing with the fold-up wings. And the Macro SkyRyder sounds even better than that. In his blog post, Trembly said “I’d still like to see that vehicle that would whoosh me out of a traffic jam at a moment’s notice.”

Moller’s got it and Macro says it will. Vertical take-offs and landings are where the rubber meets the road. Airports? We don’t need no stinkin’ airports!

So, you’re probably thinking to yourself, “Sure Dave, flying cars are for real and very cool. I want one but I don’t know how to fly and getting a pilot’s license doesn’t look all that easy.”

According to Moller, “A Skycar is not piloted like a traditional fixed wing airplane and has only two hand-operated controls, which the pilot uses to inform the redundant computer control system of his or her desired flight maneuvers.” You will need a special license to cruise around in a Moller but it sounds a hell of a lot easier than learning to fly a clunky old fixed-wing flying car. Come on, man.

And Macro even goes Moller one better. “Simply turn on the power, enter the address or phone number of the destination, confirm the commands and SkyRyder does the rest …”

Apparently, Macro plans to make its vehicle virtually idiot proof by installing an automatic pilot linked to the so-called highway in the sky computerized navigation system that NASA is developing to enable millions of us to buzz around Jetsons-style without smacking into each other or flying from Tampa to Orlando via Starke.

One more word about insuring these things. They should be way cheaper to cover than cars. For one thing, we can sit up there texting, applying eyeliner and playing with the radio without even looking up. Our autopilot will make sure we don’t rear end the X2R up ahead and there won’t be any traffic lights to blow. Just keep the altitude safely above power-line level and you’ll be fine.

Not only that but Mollers come equipped with parachutes and airbags (inside and out) that land us safely in the event of mechanical failure. Suddenly breakdowns are romantic opportunities all over again. Take that insurance companies. I want a parachute discount!

If you own or manage vacant property, or know someone who does, read this.

Whether it’s residential or commercial, vacant property poses special risks for insurance companies, which – naturally – means reduced coverage for the property owner. The link above provides a concise explanation by way of some great examples. If you’re involved with a vacant property, you really should understand specifically what is and is not covered under your policy and in what amount.

In this economy, you can throw a stone across almost any street in any town and hit a foreclosed home or a vacant storefront. How many owners of these properties understand the insurance implications is anyone’s guess but I’d be willing to bet it’s less than half.

For example, did you know the word “vacant” doesn’t necessarily mean empty?

Clintonesque, (Is is is, or is?) I know, but true. If it’s a single-family home, vacant pretty much means vacant. If it’s a commercial property, like a four-plex or a strip mall, “vacant” doesn’t mean unoccupied. The common definition of “vacant” for insurance purposes is less than 31 percent of the total square footage rented and used for customary purposes.

In other words, a strip mall of 10 units with seven vacancies is considered vacant. The same would be true of an apartment house with seven of 10 apartments unoccupied.

Generally speaking, vacant property is not covered for damages resulting from theft, attempted theft, broken glass, sprinkler leakage, vandalism and water damage over a period of more than 60 days. As for damages resulting from other, covered causes, payment is generally reduced by 15 percent across the board.

Fifteen percent maybe doesn’t sound like enough to send you screaming in a panic to your insurance agent but think about what that really means. Suppose fire burns a significant portion of your vacant strip mall. The cost of repairs is going to run into tens of thousands of dollars and you’re looking at a 15 percent kick in the shorts, in addition to the deductible. For some businesses that’s a make or break scenario, especially in these times of scarce revenue and weak cash flow.

Check your policy and speak to your agent. If you need more help, give me a call. Our agency works with underwriters that do write policies for vacant properties.