WEDNESDAY, JULY 6, 2011
The insurance industry sets its pricing models on probability of occurrence of certain random outcomes, such as car accidents, fire, death, or health crisis. Events that have catastrophic nature, such as war or flood are typically excluded from standard insurance policies and are normally covered through national insurance programs administered by the government.
The National Flood Insurance Program (NFIP). This is part of FEMA, or the Federal Emergency Management Agency, a Federal organization that provides insurance for flood in flood prone zones. Some private companies, in connection with the NFIP, may offer insurance policies. All flood policies are backed by the NFIP. Any person can get flood insurance from any Illinois licensed producer.
People may get mixed up between water damage caused by sewer back up or sump pump breakage and water damages resulting from the overflow of water resulting from the elevation of water from nearby water body. The first instance is easily covered with most insurance companies while these companies will not cover the second instance.
Unemployment Insurance: Unemployment insurance are payments made by the federal and state government to people who are not employed because of 'lack of work', not because of being fired for a reason. This type of insurance is not offered by private insurance companies. Local and State governments offer this coverage and mandate it on all wage paying employer as a percentage of payroll. Unemployment insurance is a federal-state program that is financed through federal and state employer payroll taxes. A jobless employee may or may not qualify for unemployment insurance if the reason of unemployment was anything other than "lack of work."
Besides unemployment insurance and flood insurance, local state government may also offer some state sponsored program such as:
State Health Insurance. People who are declined by private insurance companies for health insurance may apply for health insurance coverage through state sponsored programs. In Illinois the plan is called Comprehensive Health Insurance Plan (CHIP).
Nationally organized workers compensation: National Council on Compensation Insurance, or the NCCI, is an American bureau designed to collect information and set prices and rates for workers compensation. The organization is a non for profit with a not-for-profit philosophy and owned by its member insurers. NCCI assigned unwanted applicants for workers compensation to participating members.
State sponsored property insurance. In Illinois it is called the Illinois FAIR Plan. For certain property that does not qualify for insurance with carriers because of high risk or other reasons, the FAIR plan will come to assist. Illinois FAIR Plan is an association that operates like an insurance company, the FAIR Plan offers highly priced property insurance to individuals and businesses that get rejected by three or more companies.
State sponsored auto insurance. The Illinois Automobile Insurance Plan is a program designed for people who are rejected by other companies or whose premiums with private insurance is higher than those offered the Plan. For those people an Illinois licensed producer may be able to get the coverage through the Plan.
To qualify for any state or federally sponsored programs the applicant should have been declined coverage from certain number of insurers. Normally the rates for these programs are higher for similar coverage offered by private insurers. Also coverage forms may be less comprehensive than standard coverage offered by companies. Any agents in Illinois may be able to place coverage with the appropriate organization or agency, although there may be little incentive to do so.