According to Marshall & Swift/Boeckh, a leading provider of building replacement cost data, nearly two out of every three American homes, or 59 percent, are underinsured. The definition of underinsured is that homeowners, on average, have only enough insurance to pay for 78 percent of costs to replace or rebuild their homes.

One of the reasons this startling statistic has arisen is that many homeowners do not update or periodically increase the coverage on their homes. When homeowners remodel and improve their homes, they often fail to follow through with a call to their insurance agent to update their coverage.

Another contributor is the surging price of building materials, energy and labor, all which have increased replacement costs up by over 7 percent a year since 2001. If you’ve been in that home for five years, your homeowners’ insurance has been reduced to two-thirds coverage of the home by those increases alone.

Consumer advocates say that part of the problem lies in the way that homeowners insurance is sold. In the competitive marketplace, the last thing an agent wants is for the customer to run down the street to a competitor because they got a quote for $50 a year less.

They say many agents provide quick quotes to close a sale, lack the training to properly asses the value of the homes they insure and often rely on over-the-phone interviews to estimate the amount of coverage for a customer’s home. The result is that homeowners buy cheaply priced coverage that they mistakenly believe will replace their home in the event of a full loss.

That is not entirely fair to the insurance industry. Many homeowners have made home improvements and neglected to inform their insurance broker. The increase in labor and material costs has come into harsh focus during the rebuilding efforts following Katrina and Rita. Homeowners who are rebuilding after storm damage of that magnitude also find themselves facing new building code clauses that didn’t exist when the home first went up.

Suppose you’re one of those people who enjoy a glass of dry chenin blanc with lunch and an adequate merlot with dinner. If you are, it’s altogether possible that you have a room, or cellar, or a climate controlled room in the cellar that houses your wine collection. Some say that wine collecting is the junction of affluence and idleness, but others point to the venerable European history of the crushed grape and claim its product to be worthy of a connoisseur’s attention.

In either case, if you’re a collector of wines that tend to gain value as they age, you ought to have your collection insured. For a small collection, not too expensive and primarily for consumption, insure your wines under your homeowners’ policy. Just check to make sure you have enough contents coverage to include your wines. This particular hobby illustrates the importance of a yearly inventory of your home’s contents for purposes of homeowner protection.

If your wine collection is large, you should probably invest in a stand-alone “valuable articles” policy, which gives you broader coverage than your home policy does. You can insure a collection up to a certain blanket amount (say $25,000). For collections more valuable than this, it starts to make sense to insure the wine on an itemized basis, bottle by bottle.

Stand-alone wine policies cost about 40 to 50 cents for every hundred dollars’ worth of wine. If you have a wine collection worth $100,000, your annual insurance premium is around $420. If you’ve gotten to the point where each label must be itemized, there are small specialty houses that provide wine insurance to the truly obsessed vinophile. But doesn’t that seem like buying a car that’s too rare to drive?

According to the industry trade organization The Insurance Information Institute, auto insurance rates are going to drop in 2007 – the first decline since 1999. The typical U.S. driver will pay less for auto insurance in 2007 than in 2006, with the average premium expenditure expected to drop by 0.5 percent.

The average annual cost for auto insurance premiums nationwide for 2007 is estimated at $847 per policy, the first decrease since 1999. While the decline translates into hundreds of millions of dollars across the spectrum of all U.S. drivers, the average drop in rates will amount to $4, down from an average of $851 in 2006. The trend in the auto market certainly contrasts with the health insurance industry, where premium rates for employer-sponsored policies have risen 87 percent over the past six years (2000-2006), according to a survey by the Kaiser Family Foundation and the Health Research and Educational Trust.

The I.I.I. attributed the auto insurance price reductions to declining claim frequency (down anywhere from 3 to 5 percent in 2006 as compared to 2005), coupled with very modest increases in claims severity, with the average cost per claim, a figure that includes the price of medical care and property damage, rising only 2 to 4 percent in 2006 as compared to 2005.

“The I.I.I. is finding that the nation’s overall insurance rating system – how a company assesses the risk a particular driver represents – has on the whole become much fairer and more equitable through innovations in underwriting technology,” said an I.I.I spokesman. One of these “technological improvements” includes the consideration of an insurance applicant’s credit score as one of the benchmarks for auto insurance rates. This particular statistic put to use in insurance analysis has been controversial, and in fact was outlawed in California.

Due to the paralysis in Washington, a number of states have moved unilaterally to try and develop programs extending health coverage to the uninsured. In Pennsylvania, Gov. Ed Rendell’s health care proposal has an interesting component for young people coming out of college who are confronted with expensive health insurance options for the first time.

Health insurance companies would have to extend coverage for dependents on their parents’ insurance plans until age 30, regardless of whether they are enrolled in school or employed. The program would apply to students who take longer than four years to graduate, new graduates who must take part-time and temporary jobs before landing full-time work with benefits, and students who want to pursue post-graduate degrees.

Cutoffs for extended health coverage vary by state. Under current Pennsylvania law, insurers must cover dependents up to their 19th birthday. New Jersey is the only state that requires insurance companies to cover dependents until they turn 30, regardless of whether they are enrolled full time in school. Many states cut off the coverage obligation at age 18, unless the person is a full time student.

In California, the most recent Insurance Commissioner forbade auto insurers to use credit rating as a criterion for auto insurance rates. Virtually all major auto insurers engage in this practice. Generally speaking, the better your credit rating the lower your car insurance cost.

In the rest of the country, however, the practice remains legal and all that is required of the insurance companies is that they notify customers whose credit rating has impacted their insurance rate. The stringency of this requirement has been in question – and in court. Recently, a federal appeals court ordered Geico and Safeco – among the largest of the nation’s auto insurers – to notify virtually all of their customers about the impact of their credit rating on their car insurance premiums.

The lawsuit was filed by consumers who felt that the companies had been lax in observing the requirement and had notified far fewer customers than other insurance carriers. The case is currently before the Supreme Court and while the debate is over the legal intent of the notification law, one court observer reported that “During an hour of argument, several justices seemed taken aback at the magnitude of the federal appeals court ruling. Under that ruling, Geico Corp. and Safeco Insurance Co. would have to notify nearly all their customers that they aren’t getting the best rates because their credit scores aren’t the highest.”

The facts that emerged are that 80 percent of Safeco’s customers would have to be notified of “adverse action” as a result of their credit ratings. At Geico, ten percent of their customer base qualifies for best credit rating rates. In other words, the huge majority of insurance customers at these companies are paying higher rates because of their credit scores. Eighty to ninety percent of applicants at these companies are considered, to some degree, high risk. That’s a preposterous benchmark.

In a startling display of peremptory Ivy League hypotheses cleverly disguised as research, a Harvard University Medical School report suggests that free preventative heart medication would save health insurance companies money in the long run.

This ‘new study’ suggests insurers would be greatly rewarded financially if they removed the cost-sharing requirements imposed for certain medications taken by customers who had previously suffered a heart attack.

A combination of heart medications and cholesterol-lowering drugs has been estimated to reduce the risk of death from heart disease by 80 percent compared with a placebo. Yet, the medications continue to be greatly underused. One answer to that problem would be to provide full coverage of the heart medicines to those who had a previous heart attack, instead of requiring the patient to pick up a share of those costs.

Often the extra coverage could be entirely offset by the savings generated when health problems are averted, said researchers at Harvard Medical School. Under conservative assumptions, compliance with a medication regimen would increase from 50 percent to 63 percent among patients when they bear none of the cost for the medicine. The study estimates the additional coverage would cost insurers an average of $550 per patient, but that would lead to fewer deaths and nonfatal heart attacks and strokes, saving $1,731 in costs per heart-related event.

“If insurers can both boost compliance rates and prevent secondary heart disease events by shouldering these out-of-pocket costs, it’s worth the investment,” said an assistant professor at Harvard.

It is worthy of note that these medications reduce risk from heart disease but nowhere is it claimed that they actually avert health problems. They delay secondary heart disease events perhaps, but they do not cure heart disease.

Sales of federal flood insurance rose sharply across the country last year after homeowners witnessed the devastation wrought by Hurricane Katrina and realized that typical insurance policies didn’t cover many victims’ losses. From November 2005 to November of last year, the number of federal policies jumped more than 13 percent, far more than normal, according FEMA. Participation in coastal and other vulnerable areas spiked dramatically. In Mississippi, the number of policies jumped 61 percent, for example. Strong increases were seen in northeastern and western states as well. Idaho had a 24 percent increase, and Rhode Island 21 percent.

The new policies will provide a badly needed injection of cash in the form of annual premiums. Congress launched NFIP in 1968 to help homeowners living in flood-prone areas get flood insurance to complement private policies restricted to covering wind, fire and other hazards. Private agents sell the federal policies, which are subsidized by taxpayers because premiums don’t factor in the real risks of damage.

The program was self-financed for decades until the storms of 2005 wrecked its finances. It expects to be about $20 billion in debt to the Treasury once all claims are paid. It takes in $2 billion a year in premiums, but more than a third of that goes to debt payments.

This is a local story out of Massachusetts, but it is worth a look simply because it illustrates the impact of insurance fraud on auto insurance rates for all of us. The story is that drivers in communities with an auto-insurance fraud task force will see a higher average auto insurance discount in upcoming renewals than the rest of the state.

“The reduction this year is largely attributable to these task forces, particularly in communities like Lowell, who have been fighting insurance fraud,” said Daniel Johnston, executive director of the Automobile Insurers Bureau of Massachusetts. “I’ve always said if we take fraud out of the system, we could get rates down.”

Experienced drivers with standard coverage in the rest of the state will see an 11.7 percent reduction and will pay about $114 less, according to the bureau. But Lowell drivers will see about $216 knocked off their insurance bills, or a 15.2 percent reduction.

Lawrence had the highest reduction in the state at 24 percent. Dorchester had a 17.8 percent cut, and Springfield a 17.7 percent cut. Currently, 12 cities have task forces devoted to decreasing insurance fraud, and those cities represented the bulk of insurance claim decreases. The 12 cities had a $192 million reduction in insurance claims last year, while the entire state had a $300 million reduction.

Progressive, which sells auto insurance directly to consumers over the phone and on the Internet, is offering Michigan drivers a program that will allow them to pay lower premiums by driving less and during non-peak hours. TripSense, a program started in Minnesota in 2004 that now has 6,000 participants, can save drivers up to 25 percent off their premium depending upon how much and when they drive, according to the Progressive Group of Insurance Companies.

However there’s a catch: Drivers must install on their cars to record mileage. The mileage log also collects information about vehicle speed, acceleration and braking.

Progressive says that information is not used to calculate the insurance premiums, but to better understand what causes accidents. Nevertheless, consumer privacy advocates question the motives of a car insurance company providing a monitoring device — on a voluntary basis — that collects more than just the car’s mileage.

The average discount among TripSense customers in Minnesota is 11 percent to 12 percent annually, according to Progressive. The company’s product manager for Michigan said that other than mileage and time of day the vehicle is in use, the other data will not be used to calculate insurance premiums. And he said the data won’t be sold to a third party for marketing purposes.

“Potentially, consumers can be concerned about all the data we’re collecting, so that’s why the program is optional. But some people want to be rewarded for driving less. The only way you can do this is by providing verified mileage.”

A Connecticut economic development organization has recently completed a survey that shows the insurance industry to be among the major employers in the state. Industry employment and payroll show that Connecticut — once known as the insurance capital of the United States — is still more dependent on insurance than any other state, according to the 48-page study by the Connecticut Economic Resource Center Inc.

The study was produced to reinforce a recent advertising campaign that was intended to breathe life into what has historically been Connecticut’s most important industry. In recent years, the state’s prominence has been challenged by both Iowa and Nebraska.

Wages paid by insurers in Connecticut account for 6.1 percent of the state’s total wages, the study says. That’s nearly double the 3.2 percent in Iowa, the next-highest state, which has been aggressively recruiting insurance operations since the 1980s.

Connecticut also has the highest concentration of insurance company jobs of any state, 3.2 percent of total state employment in 2005, about the same as in 1995. Ranked second in that category is Nebraska, at 2.1 percent due to companies such as Mutual of Omaha, Lincoln Benefit Life and Physicians Mutual Insurance Co.

From 1995 to 2005, insurance jobs in insurance companies in Connecticut increased by 2.4 percent, the study says, citing the U.S. Bureau of Labor Statistics. In the same period, 1995-2005, insurers’ operations in Iowa increased employment by 8.8 percent.

Connecticut has 72 insurance company headquarters, according to the study. In addition to well-known insurers such as Aetna and The Hartford, headquarters include many that are smaller or not as well known to the public in industry segments such as surety, accident and health insurance and reinsurance. The state has laid claim to “The Insurance Capital of America” since early in the nineteenth century.