What is the difference between uninsured and underinsured motorist coverages?

January 31st, 2011

Uninsured motorist coverage will usually reimburse you and anyone in your vehicle for any bodily injury and medical expense or death from an auto accident caused by:

1. A driver with no insurance

2. A hit-and-run driver

3. A driver of a stolen car

It does not cover property damage.

Underinsured coverage provides bodily injury coverage when the negligent driver has some insurance, but it is insufficient to cover your bills. Underinsured motorist coverage pays the balance — up to the limit on your policy.

Business Owners Policy – BOP

July 15th, 2010

If you own and/or run a smaller business, your insurance needs may be properly handled by a businessowner policy (BOP). BOPs are similar to a homeowners policy, offering both property and liability protection. Businesses such as retailers, wholesalers, small contractors, artisan contractors, dry cleaners, restaurants, offices and convenience stores (including those with gas pumps) are eligible for BOP coverage. All such operations may be insured by a BOP as long as they are not larger than 25,000 square feet in total floor area or have gross annual sales greater than $3,000,000 (per location). Cooking operations, due to the higher fire and other accident exposures, have significantly more restrictive guidelines, such as being disqualified for a BOP when it square footage exceeds, typically, 7,500 s.f.

PROPERTY COVERAGE

BOPs protect buildings as well as the following:

building  additions (completed or being built); indoor and outdoor fixtures machinery and equipment machinery and equipment landlord furnishings,
mowers, ladder, snowblowers, and similar maintenance property outdoor furniture floor coverings Refrigerating appliances ventilating appliances
Cooking appliances Dishwashing/Drying appliances Clothes washing/drying appliances materials, equipment, and supplies temporary structures located near the insured premises

LIABILITY COVERAGE

The policy’s protection for business personal property (such as office equipment, copiers, desks, etc.) applies whether the property is located inside or immediately outside the covered buildings. The category also includes property you own, lease or control (i.e., borrow or control) as long as the property is used by the business.

Businessowners liability coverage provides comprehensive protection for claims or suits made by other parties. Its liability section covers losses involving injury to other persons or damage to property that belongs to others. It also provides limited protection against personal injury (slander or libel), advertising injury and losses involving an operation’s products or services.

Naturally, there are certain situations that are not covered by a BOP. For instance, there is no coverage for losses involving most vehicles, money and securities; illegal property (contraband), land, water, growing crops or lawns; or watercraft.

A BOP may be supplemented to provide additional protection. Property coverage options include adding insurance for accounts receivable, valuable papers and records, earthquake, spoilage, etc. Liability coverage can be expanded to handle additional business interests, limited vehicle liability, losses related to personnel situations, liquor liability and injuries to leased employees.

A BOP may be the answer to your company’s coverage needs and it may be worthwhile to get more information on the BOP from the nearest insurance professional.

What are Insurance Perils?

July 15th, 2010

Ever had to read your insurance policy for a home, seasonal home or rental property? Then you probably ran head-first into the terms “hazard,” “peril,” or “cause of loss.” These refer to events that could damage your property and which are covered by your insurance. While you may understand some terms, you may be confused by others. This article (and part two) briefly explains some common terms which, in some cases, may not mean the same as they do in the dictionary.

Fire – Fire has been defined by the courts as “combustion sufficient enough to produce a spark, flame or glow.” By definition, a fire is not smoke. A fire is not charring. A fire must produce a spark, flame or glow. And not all fires are covered under the fire peril. Over the years, the courts have distinguished between “friendly” and “hostile” fire. A friendly fire is one that burns where it was intended to burn: a flame on a gas stove; a fire in a fireplace; fire in an outdoor grill.

A hostile fire is one that burns where it was not intended to burn: the kitchen drapes; the rug by the fireplace; a tree near the outdoor grill. Only direct damage caused by hostile fire (including smoke from a hostile fire) is covered by the fire peril.

Lightning – Lightning is “naturally generated electricity from the atmosphere.” Damage covered by the lightning peril may be the result of lightning itself or the result of a fire caused by the lightning.

With regard to lightning, there is rarely a coverage problem when there has been a direct strike. The other common cause of lightning loss is the surge of electricity, typically caused by lightning striking power company equipment. Appliances in a house can be damaged by the electrical surge. The cause must be established for coverage to apply. A surge from malfunction of power company equipment, or a short circuit, would not qualify.

Explosion – In basic or stripped-down policies, explosion refers to any explosion that occurs within a structure that is covered by a given policy. However, several types of explosive events are usually excluded such as:

  • bursting of water pipes
  • electrical arcing
  • explosions of steam boilers or pipes owned, leased or operated by the insured
  • rupture or bursting of pressure relief devices

In more comprehensive polices, explosion also applies to events that originate externally.

Windstorm – The peril of windstorm involves damage caused by direct action of the wind, including high winds, cyclones, tornadoes and hurricanes. Windstorm coverage primarily covers wind damage to a building’s exterior, but will also cover interior damage if the wind breaches the exterior (causes a hole or opening in a wall or roof).

Note that the wind must reach sufficient velocity to have caused direct damage at more than one location to establish a “windstorm” loss. However, leakage through an aging roof during heavy rain is not a basis for a windstorm claim. The windstorm peril does not cover loss to the following property when located outside of the insured building: awnings, signs, radio or television antennas or aerials including wiring, masts or towers; canoes and rowboats; lawns, plants, shrubs or trees.

Hail – Hail damage is just that: damage caused by the direct action of hail to insured property. As with windstorm, the hail or some other covered peril must cause damage to the outside of the insured dwelling allowing hail to enter the premises in order for interior hail damage to be covered. As a result, if a window were left open, allowing hail to enter a building, that damage would not be covered.

Similarly, the hail peril does not cover loss to awnings, signs, radio or television antennas or aerials including wiring, masts or towers; canoes and rowboats; lawns, plants, shrubs or trees when located outside of the insured building.

Riot or Civil Commotion – Riot usually refers to a gathering of three or more people that results in the use of force or violence against individuals or property. Damage caused to the insured property due to riot is covered under this peril. Coverage includes direct loss caused by striking employees whether a riot occurs or not. Civil commotion can be defined as an uprising or disturbance by a large number of people. As with riot, damage caused to the insured property due to such an uprising would be covered under this peril.

Bouvier’s Law Dictionary summarizes five necessary elements of a riot: At least three persons must be involved; there must be a common purpose; there must be actual inception or execution of that purpose; there must be an attempt to help one another or to cooperate by force if necessary; there must be display of force or violence in such manner as to alarm a person of reasonable courage.

There may be no valid distinction between riot and civil commotion. “Civil commotion” has been described in courtrooms as “an uprising among a mass of people which occasions a serious and prolonged disturbance and an infraction of civil order, not attaining the status of war or armed insurrection. It requires the wild or irregular action of many persons assembled together.

Aircraft – The aircraft peril provides coverage from damage caused by aircraft, including self-propelled missiles and spacecraft.

Webster’s New World Dictionary of the American Language defines “aircraft” as “any machine or machines for flying, whether heavier or lighter than air; airplane, dirigible, balloon, helicopter, etc.”

This peril would apply to damage caused by the falling of an aircraft or any of its parts, on a covered dwelling and its contents.

Vehicles – Damage caused by direct physical damage with “vehicles” is covered by the vehicles peril. Damage caused by objects thrown by vehicles (such as stones, etc.) is covered as well. The vehicles peril does not include loss to a fence, driveway or walk caused by a vehicle owned or operated by the insured or a resident of the described location.

Smoke – Smoke damage is usually referred to as “sudden and accidental damage from smoke.”

Any sudden and accidental damage from smoke caused from any source except smoke from agricultural smudging or industrial operations would be covered. The terminology used makes clear that the damage must occur over a short period of time. A prime source of claims is furnace malfunction that results in the backup and blowing of smoke and grit into rooms through a central heating system.

Agricultural smudging would include damage from burn-off of growing materials on or near the covered premises and use of smudge pots to protect growing crops and trees from frost. Damage from smoke associated with businesses would include that caused by the “blowing out” of smokestacks in the course of periodic cleaning. Excluded damage would also include damage caused by smoke from malfunctioning industrial heating and processing equipment.

Volcanic Eruption – Damage caused to insured property by the eruption of a volcano is covered under the Dwelling Policy Program; however, loss caused by earthquake, land shock waves or tremors is excluded.

This peril is designed to address the damage caused by the eruption of a volcano, including the ensuing lava flow and airborne particles. In most policies, one or more volcanic eruptions that occur within a 72-hour period are considered to be a single covered event.

Vandalism and Malicious Mischief – Vandalism and malicious mischief are generally cited as a single peril meaning willful or malicious physical injury to or destruction of property. Historically, malicious mischief has been added to vandalism to identify the covered peril because it has a special meaning by definition and because it embraces a number of situations that are not technically covered by “vandalism.”

“Vandalism” means willful destruction or defacement of things of beauty. It implies general hostility to nice things and satisfaction from their destruction. It is derived from the name of a Germanic people who overran Gaul, Spain and northern Africa in the 4th and 5th centuries and who sacked Rome.

“Malicious mischief” implies damage to property motivated by hatred or spite. It is not associated with beautiful things, but rather with utilitarian things such as machinery and business buildings and their contents. Acts leading to this kind of destruction are premeditated and include those arising from resentment and ill will during labor disputes.

Accidental damage is not covered under the “vandalism” peril. Coverage applies only when the damage is intentional. The vandalism and malicious mischief peril does not include loss to property on the “residence premises” if the dwelling has been vacant for more than 30 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant. Furthermore, the vandalism or malicious mischief peril does not include loss by pilferage, theft, burglary or larceny.

Damage By Burglars – Damage caused by burglars refers to the damage caused during a break-in and not to the actual stolen property. For example, if two burly burglars attempted to remove a grand piano from the insured residence, the actual damage to the walls, floors and doorways caused by the piano being moved would be covered. The actual loss of the piano would not. Typically there is no coverage for loss to property in a building that has been vacant for more than 30 days immediately before the loss.

Falling Objects – This peril covers damage to the exterior of the insured premises and its contents if the falling object first damages the roof or exterior wall. Damage caused by any falling object is covered, including falling trees; however, damage to the falling object itself is not covered. This peril does not include loss to outdoor radio and television antennas and aerials including their lead-in wiring, masts and towers, outdoor equipment, awnings and fences.

Weight of Ice, Snow or Sleet – Damage to the insured building and/or contents due to the weight of ice, snow or sleet is covered. This coverage excludes loss to certain property, such as: awnings; fences; patios; swimming pools; foundations; retaining walls; bulkheads; piers; wharves; or docks.

Accidental Discharge – Damage to insured property caused by accidental discharge or overflow of water or steam from within a plumbing, heating, air-conditioning or automatic fire protective sprinkler system or household appliance is covered. Coverage includes the cost of tearing out and replacing any part of the building on the residence premises necessary to repair the system or appliance from which the water or steam escaped.

Damage caused by continuous or repeated seepage or leakage to the insured property is not covered; the cause must be sudden and unforeseen. Damage caused by freezing is not covered under this peril. Further, this type of loss is not covered if the dwelling has been vacant for more than 30 days immediately before the loss. A dwelling being constructed is not considered vacant.

Sudden and Accidental Tearing Apart – Sudden and accidental tearing apart, cracking, burning or bulging of steam or hot water heating systems, air conditioning systems or fire protective sprinkler systems or appliances for heating water is covered. The emphasis on this peril is that damage caused by the steam, hot water and related systems must be sudden and accidental as opposed to gradual and foreseen.

Freezing - Loss caused by the freezing of a plumbing, heating, air-conditioning or automatic fire protective sprinkler system or of a household appliance is covered. This peril does not include loss on the residence premises while the dwelling is vacant, unoccupied or being constructed unless the insured has taken reasonable care to maintain heat in the building or shut off the water supply and drain the system and appliance of water.

Electrical Damage – This peril involves damage to insured property as a result of sudden and accidental artificially generated electrical current. Tubes, transistors and similar electrical components are not covered.

Insurance Fraud

July 15th, 2010

Insurance fraud makes victims out of insurance companies and their customers. In common terms, insurance fraud is lying to or deceiving an insurer in order to make money or to become insured. Some common fraud schemes include:

  • “padding” (inflating the true amount of) a claim
  • lying or hiding (concealing) important information when applying for insurance
  • lying or hiding (concealing) important information when reporting a loss
  • submitting false claims
  • “staging” accidents
  • Failing to report recovered property
  • faking theft claims
  • committing (home or vehicular) arson for profit

As a consumer, fraud should concern you since the cost is passed directly on to you in the form of higher insurance rates. You can play an important role in reducing fraud.

Fighting Auto Insurance Fraud

Persons attempting to commit insurance fraud often do so by deceiving innocent drivers during actual accidents or by involving innocent drivers in “staged” accidents. Do the following in order to minimize this risk:

  • Drive defensively, keeping space between you and surrounding cars.
  • When traffic slows, begin braking before the car in front of you does.
  • Be careful when turning into a lane that allows two or more autos to turn left at the same time. Victims of insurance fraud are often people who float across the line when turning and then are intentionally sideswiped by a person who is “staging” an accident.
  • If you are in an accident, write down license numbers of all cars involved in the accident, get the names and contact information of all persons involved and their insurers. Count the number of passengers in the other cars and get their names, addresses and any other pertinent information.
  • Call the police and get a police report even if the damage is minimal. DO NOT let another driver talk you out of calling the police.
  • Carry a disposable camera in your glove compartment or make use of a cell phones camera feature and take pictures of the damage to the vehicles and of all drivers and passengers in the cars.

Fighting Homeowners Insurance Fraud

It is far more difficult to involve an innocent party in homeowner fraud. However, a homeowner can help himself and help deter fraudulent claims by properly maintaining their home, and by removing or repairing items that could create tripping hazards to outside parties. Also, if someone is injured in your home, be certain that you get full information and be sure that an injured person gets any needed treatment. Carefully document any incident, including all impressions about likely injury. It may also be prudent to show healthy skepticism over any information on medical bills or claims.

Report suspicious actions such as a friend who asks you to store valuable property and you then find that they reported to his insurer that the property was stolen.

Think of insurance fraud as money out of your pocket-because it is. According to the US Chamber of Commerce, fraud adds 25% to property and casualty insurance rates.

If you are involved in an accident and you are suspicious that fraud may be involved, report it to the authorities and your insurer. Another helpful source for fraud information is the National Insurance Crime Bureau at 1-800-TEL-NICB (at the time of this writing, their Website was located at www.nicb.org).

Allstate announces big hike in Pa. Premiums _(Taken from Philly.com)

June 2nd, 2010

By Harold Brubaker

Inquirer Staff Writer

Allstate Property & Casualty Insurance Co. is imposing an average premium increase of 33.4 percent on the roughly 45,000 Pennsylvania customers who buy only homeowner’s insurance from the company.

The average increase for customers who insure both their homes and their cars with the division of Allstate Corp. in Northbrook, Ill., is 11.3 percent, according to a filing with the Pennsylvania Insurance Department. The increase was effective for renewals starting May 20.

The big jump in costs for homeowners-insurance-only customers prompted Lance Haver, consumer advocate in the Philadelphia Mayor’s Office, to buy radio advertisements with his own money warning consumers of the rate increase and advising them to shop around before their renewals kick in.

Haver, in an interview Tuesday, called the two-tiered rate increase bizarre. It’s as if they think there is “some correlation between your house catching fire and who you insure your car with,” he said.

Brett Ludwig, a spokesman for Allstate, said Tuesday that customers who insure only their houses with Allstate have filed both more frequent and higher-cost claims. “The numbers really do speak for themselves,” he said. Ludwig said the frequency of claims was weather-related, but the cost was linked to the price of labor and materials.

Overall, Ludwig said the insurer had not raised rates in six years. The last rate change was a 10 percent decrease four years ago. The increases for both types of customers, which average 18.3 percent, were forced by more frequent claims and higher costs, he said.

Typical rate increases in the state are in the 5 to 10 percent range, said Melissa Fox, state Insurance Department spokeswoman.

To soften the financial blow, Allstate doubled the discount for customers buying both home and auto insurance to 30 percent from 15 percent. “We’re trying to be as sensitive as we can,” Ludwig said.

For the average Allstate customer in Pennsylvania with only a homeowners’ policy, the premium will rise to $934 from $700. However, if the customer adds Allstate auto coverage, that would be reduced by 30 percent. Customers can save even more by insuring two or more cars, Ludwig said.

Ludwig said Allstate agents were contacting customers about the increase.

Haver wanted the Insurance Department to notify Allstate customers. When that did not happen, he took the matter into his own hands, paying $950 to run his 30-second spot 10 times on KYW.

Replacement Cost vs Actual Cash Value

May 6th, 2010

There are several different methods by which your insurance company may calculate the amount it will pay you for a loss.  The most common are replacement cost and actual cash value.   When deciding between replacement cost or actual cash value it is important to understand each type of coverage.

Replacement cost is the amount it would take to replace or rebuild your home or repair damages with material of similar kind and quality, without deducting for depreciation.  For example you have a computer stolen form your house

Example of Replacement cost:  If your computer is stolen, a replacement cost policy will reimburse you the full cost of replacing it with a new computer of like kind.The insurer will not take into consideration the fact that it was 7 yrs old, and ran really slow.

Actual cost values (ACV)  is the amount it would take to repair or replace damage to your home after depreciation.   ACV= Replacement Cost – Depreciation

Example of ACV: In the case of the stolen computer, the insurance company would deduct from its replacement cost an amount for the 7 yrs of use it endured prior to the time it was stolen.

Ushally a Replacement cost  policy is  a little more money but if you ever have a claim it is the type you want.

Independent agents vs. Captive agents

April 22nd, 2010
 

Captive Agents

1. Their insurance company often prohibits use of other companies.

2. Certain types of policies are pushed more than others at the insurance company’s request.

3. Agents are required to meet strict quotas, so may push for policies or policy types that are not as necessary.

4. Agent is prohibited from referring you if they can’t sell you a policy.

 

Independent Agents

1. Fewer regulations imposed by insurance companies.

2. Can provide several types of insurance. We offer personal and business insurance to fit your individual needs.

3. Ability to compare price, product and service among a variety of companies.

4. Ability to get a policy through another insurer if a primary company can’t write the policy.

 

Protect your Classic Car

April 21st, 2010

Depending on the type of car you own and your driving history of tickets and accidents, you are likely insured in the standard or preferred auto market. Both markets cover typical or average cars and operators. This allows insurance companies to use a comfortable set of assumptions about expected losses and repair expenses for developing insurance premiums. However, if you own a classic or antique auto you’re in a special coverage situation.

Classic and antique cars may have to be covered by a specialty market. A classic auto is commonly considered to be an auto around 15 to 25 years old. Specialty coverage is necessary because standard auto coverage rates are based upon a car losing value each year due to aging and normal vehicle use. The owner of a classic or antique car needs coverage for a vehicle that retains or increases its value.

Specialty car insurers typically base their rates on elements such as:

  • car’s current value (often established by appraisal)
  • any special design or features
  • deductible
  • use (exhibition, touring, parade)
  • availability of storage in a locked garage
  • owner’s age (no youthful drivers)
  • whether spare part coverage is included
  • availability of another car for normal vehicle use
  • whether the car’s coverage includes automatic increases to account for inflation

If you have a special auto, give us a call 800-443-5903  for advice.  Or fillout our online quote form https://www.lionstoneins.com/quoteauto.asp 

 

Umbrella and Uninsured Motorists Liability

April 21st, 2010

How does your business umbrella policy handle a loss involving an uninsured or an underinsured motorist? Uninsured Motorist (UM) and Underinsured Motorist (UIM) laws vary by state. However, they are meant to provide an injured person with protection when their loss was caused by a driver who is either uninsured or who is inadequately insured. In the last few years, more court decisions have favored allowing “full compensation” for such losses. The result is that more judgments are being paid under a coverage part that was designed to be the “last resort” (collecting coverage under your own policy).

Liability coverage is designed to pay for injury that you caused to others. Let’s take a simple example. Phil owns PC Physician, a firm that services personal computers and laptops, including pick up and delivery. While making a house call, a PC Physician service van driver is distracted, runs through a red light and crashes into another car. The injury to the car’s driver and the damage to her vehicle are covered by the liability section of PC Physician’s automobile policy but the injury and damage to the PC Physician driver and van are not covered.

An Umbrella Liability policy only provides liability coverage, not coverage to you for any injuries you receive. UM and UIM provide coverage to you for injuries caused by another party, acting as substitute liability coverage. While state laws are fairly clear in their requirement that primary auto policies include UM and UIM protection, it’s not clear if umbrellas (secondary or excess policies) are also subject to the requirement.

In recent years, more attempts have been made to force umbrellas to pay for injuries involving uninsured or underinsured drivers. At each level of the court system, conflicting opinions have been written on this subject. The result is tremendous confusion within the legal system and the insurance industry whether an Umbrella Liability policy provides a higher level of UM and UIM coverage.

Rather than be confused, contact an insurance professional and discuss the issues within your state and the states where you operate automobiles. Determine what options are available from your Umbrella Liability carrier and what best protects your assets

Conduct an Insurance Check-up this Tax Season

April 20th, 2010

How to Save, Avoid Risk

Tax season is a great time to re-examine your financial risk with your insurance adviser, says Lionstone Insurance Advisors LLC. You may be wasting money on unnecessary coverage or not realize where you are vulnerable to serious losses. In addition, the insurance landscape has shifted since September 11th, and prices and protections are changing in some key areas.

 

Because there are so many types of insurance available, consumers should sit down with a reputable insurance professional who can help sort through some of the confusion. Solid advice from a Trusted Choice® insurance agency may save homeowners thousands of dollars by outlining which kind of coverage suits them. A comprehensive homeowners policy may even eliminate the need for other smaller, more specific personal insurance policies. Here are a few key issues consumers may want to explore when deciding if the insurance coverage they have is really right for them.   

 

AT RISK:  HOW COULD YOU BE UNDERINSURED?

 

Home-based business. At least 60% of in-home entrepreneurs are not properly insured, according to an IIABA study. Of those inadequately protected, nearly half didn’t realize they were at risk because they thought their homeowners insurance covered them. While a basic homeowners policy will cover a computer used at home for personal use, it won’t protect entire home-based firms. For example, homeowners’ policies typically provide $250 for computers off-site and won’t cover lost data or business liability. That leaves many people who use laptops for business and other entrepreneurs vulnerable.  

 

Valuable collectibles. “Standard” homeowners’ policies usually provide coverage for the “contents” of a home to 50% of the value of the house. So, people with extensive collections of silver, antiques, jewelry, dolls, etc. should consider additional coverage to protect these sentimental treasures. But the best way to buy this type of coverage is from the home insurance company—an “endorsement,” which is cheaper than a stand-alone policy. (For instance, a person with $100,000 coverage on their home will have its contents insured to $50,000. If that same person has $30,000 in antiques, that will significantly subtract from coverage for the rest of the home’s contents, such as clothing or furniture.) Many policies also set “sublimates” for contents insurance. For instance, most limit theft coverage on jewelry to $1,000 and firearms to $2,000. Those with more valuable jewelry, gun, or other collections should consider additional protection.

 

High income bracket. People lucky enough to have high-profile jobs or other accumulated assets should consider a comprehensive umbrella liability policy to protect against serious financial loss. Unfortunately, many people don’t have this coverage because they haven’t thought of it or they feel that their basic insurance programs are adequate. A good umbrella policy can cost as little as $150 per $1 million in coverage and insures against personal liabilities, including car- and home-related claims.

 

No replacement cost coverage on their property. Replacement cost coverage is 10 or 15% more expensive, but it replaces the item(s) with like kind and quality. Most standard home insurance policies provide replacement cost on the structure, but only “actual cash value” (ACV) on the property. ACV is the actual cost to replace the item, but after depreciation. With replacement cost coverage, a $1,000 TV set bought eight years ago would be replaced with a similar type of TV, regardless of depreciation.

 

Children in college. An IIABA national survey showed that 80% of college students who rent housing for the school year may not have adequate coverage to protect their belongings when away from their primary residence. Incidentally, it also revealed that one-in-seven college students lack health insurance coverage and that an alarming 85% of families thought their health insurance would cover a college student studying overseas for more than a month. In fact, most health policies do not extend abroad and families need to know they may be underinsured in that area. 

 

Home remodeling. Home renovation can leave homeowners vulnerable. One-in-four home remodeling projects increase the value of a home by more than 25%, but too few consumers consider increasing their homeowners insurance limits to reflect that increased value. Most insurance companies require homeowners to insure their home to a minimum of 80% of its replacement value to be eligible for full coverage. If coverage falls below that level and the homeowner experiences a loss, they will be penalized with a partial settlement. In addition, many people don’t take basic steps to protect themselves from liability exposure while construction workers are in the home. Consumers should always ask for a certificate of insurance from anyone employed in their home and seek advice from a good insurance agent.

 

SAVING MONEY:  HOW COULD YOU BE OVERINSURED?

 

Both travel and flight insurance usually are costly and unnecessary short-term policies that simply aren’t needed for those who have broader health and disability insurance through an employer or other plan. Don’t be lured by the flood of travel-related insurance offers since September 11th. Most typical health or life insurance policies include anything offered in specific travel insurance packages. And incidentally, baggage insurance is usually covered by a homeowners policy.

 

Credit life insurance. Trusted Choice® agencies recommend avoiding credit life insurance (for new furniture or credit card debt, for example) under any circumstance.  These policies, offered by credit card companies and other lenders, extend for the term of the loan and decrease in value over its life. They are designed to protect a third party if the consumer dies before the loan is paid off. However, they provide no protection to beneficiaries, only to the company that offered the credit or loan.

 

Deductibles are too low. The owners of an expensive home need to consider whether a low deductible makes sense. If someone steals the TV, it isn’t going to break the bank.  Those same consumers need lots of insurance for a total catastrophe or if they get sued. Therefore, they may want to take a $1,000 deductible and use the savings, which can be 10 to 20%, and buy an “umbrella liability” policy to give them $1 million or $2 million of coverage in case they’re sued.

 

Specific computer insurance policies. Though this coverage may seem like a good idea, because so many people now have computers at home, a standard homeowners policy will cover most basic personal computer equipment. If you have a home insured for $100,000, you typically have $50,000 of personal property coverage, including computer equipment not used for business. If used for business, the home insurance policy typically provides $1,500 or $2,500 of coverage for computers. Only people with home-based businesses, laptops used for business outside the home, or elaborate high-tech equipment need to consider extra coverage. But it’s cheaper to buy an endorsement to the home or home-business policy rather than a separate computer policy. (By the way, the same concept holds true for cancer insurance or trip-specific life insurance, and other specific policies. Broader coverage is cheaper in the long run and might be needed.)

 

DID YOU KNOW?

 

Renters insurance not only protects the contents of a rented property, but also almost always shields the policyholder from liability. And it’s not expensive (because you’re not insuring the building—that’s the landlord’s responsibility). A typical policy that offers $15,000 in property protection and $100,000-$300,000 in liability coverage can be as little as $150-200 a year.

 

Dog owners whose pets are known to be aggressive should never go without liability insurance or they may be in for a rude awakening if they get sued. Bites are by no means rare. Companies pay out about $1 billion in dog-related claims a year and estimate that one-third of all homeowners’ liability claims are due to dogs. 

 

Insurance discounts are readily available for consumers who combine family policies, use one insurance company for several types of coverage, or take other measures such as using property theft deterrents or maintaining good driving records. Consumers should consult with an independent insurance agent at least once a year to evaluate changing needs and look for cost savings.