Archive for the ‘insurance quote’ Tag

A review of Personal Insurance – Home Owners (Part 1)   1 comment

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Sitting at home, blogging away!

Homeowners coverage.  Where to begin?  With your home, of course!  In this “installment,”  I’m going to review a couple things to keep in mind while reviewing or considering insuring your home – based on the assumption that you own, not rent.

The primary “concern” of homeowners is protecting the actual dwelling itself.  As there are quite a few formats to do this, I’m only going to cover the most common form, called an HO5 policy

Under an HO5 homeowners policy, the dwelling is covered for comprehensive perils at replacement cost valuation.

  • Comprehensive Perils – CP is actually easier to explain by starting with its counter-part, named perils.  A named perils policy means that only claims (causes of loss or perils) specifically named on the policy are covered – if it’s not listed, it’s not covered.  Comprehensive perils is the opposite – if a cause of loss is not specifically excluded, it’s covered.  Every company has its own list of excluded losses, but some common ones are flood, acts of war, intentional acts of the homeowner (arson, for example), and wear and tear (in other words, maintenance is typically NOT covered!).
  • Replacement Cost Valuation – RCV describes how payment for a loss will be made.  When you carry RCV coverage, a loss will be paid out based on the true cost to repair or replace damaged goods (less your deductible).  Actual Cash Value, by contrast, pays based on the cost to repair or replace MINUS depreciation (typically based on age and condition). 

Understanding RCV is what typically causes frustration.  The easiest way to understand how this works is by using an example.  If you have a fire in your home, and the kitchen is destroyed, RCV dictates that the insurance company pay the cost of restoring your kitchen (as closely as possible) to its original condition, REGARDLESS of the age of materials there.  In other words, your cabinets may be 15 years old, but an RCV policy pays for the cost of brand new cabinets (comparable – “like kind and quality”).

The replacement cost valuation of your home is commonly found by entering in the characteristics of your home into software designed for this purpose – how many square feet, how many stories, year built, updates, style, construction, etc etc.  A common source of confusion is that the RCV of your home is often greater than the market value of the house – this occurs because the cost to rebuild per square foot is almost always higher than the actual market value per square foot – but this works in your favor!  If a home policy were written based on market value, and you had the kitchen fire described above – guess what!  The cost to repair would not be paid in full: unless your kitchen were brand new, it’s virtually impossible that it’s market value would be anywhere close to what the replacement value is!

Contents Coverage – Another important component of your homeowners policy is contents, or personal property, coverage.  This is for the actual contents of your home – simply put, anything that’s not permanently attached.  So all of your clothing, furnishings, appliances/electronics, decorations, etc etc.  This is almost always calculated as a percentage of your building limit – 60, 70, and 80% are the most common levels. 

Something important to remember – if you have high-value, unique, antique, or difficult to replace items, it’s generally a good idea to schedule them on the policy.  Most policies have limitations or exclusions for these items that generally mean that you are only going to get a fraction of what they are actually worth.  In addition, by scheduling items, you can typically get minimal or zero dollar deductibles, which drastically reduces your out of pocket expense in the event of the loss.  The coverage tends to be more expensive than general contents (PP) coverage, but in the long run is far more beneficial!

Liability Coverage – The last of the major coverages I will review today is liability coverage, which covers damage or “injury” for others.  The most common example of a liability situation would be if a person (NOT a guest of yours, who are covered by “Medical Payments” coverage) were on your property, slipped and fell, and required you to pay for their injury and rehab costs.  This would be covered by the liability coverage on your policy.   Other examples of common liability claims would be if you happened to accidentally damaged someone else’s goods – knocking over the TV in their house, hitting a baseball through their picture window, etc.  It would also cover injuries caused if your dog bites someone.  Contact your agent if you have questions about what would and wouldn’t be covered by your liability coverage. 

A common situation that often causes consternation – what if your neighbor’s tree fell over onto your property and damaged your home?  Would that be covered by your neighbor’s liability coverage, or your dwelling coverage?  Everyone’s favorite answer:  That depends.  If the tree is long since dead and your neighbor has been negligent in removing it, then his liability policy would cover your damages.  HOWEVER, if the tree is still alive, and was simply blown over by the wind, or some other similar “unforeseeable” incident, then the damages would be paid out of your dwelling coverage (and subject to your deductible). 

Some other coverages to consider:  Loss of Use, Other Structures, Medical Payments, Inland Marine Floater (see Scheduled goods)

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Tuckered out after a long day of writing!

3 Things I really hate about Insurance   2 comments

I mean, who doesn’t hate insurance, right?  You know what I’m barking about.  All the money paid out, and for what?  Make my agent rich!  Go figure.

This blog is devoted to my top 3 bones to pick (get it, bones?).  What do you mean, my daddy has to pay more for his policy?  That’s less treats, less trips to the doggy park (and less trips to the kennel.  This may not be all bad).  What do you mean, the claim is denied?  Who’s gonna pay for it now…. me??  I think not!

Without further ado:

  • I haven’t had a claim in forever!  I’ve NEVER had a claim, for that matter.  Why does my premium keep going up?  This is one my daddy cries about all the time – he gets this question a lot, and he comes home and has to bend my ear at least once or twice a week about it.  So, believe me, I know ALL about this one.

I’ll keep it simple.  Basically, when my daddy pays his insurance premium, that money goes into a bucket – a big bucket full of money from everyone’s monthly premiums.  Claims are paid out of that same bucket.  So when there are too many claims, or the claims are too expensive, the bucket gets empty.  When the bucket gets empty, then my daddy’s premium goes up a little, even if he hasn’t had a claim.  Those who have had claims pay more, but everyone sees a little bit of an increase:  that’s what insurance is – the spread of risk of a large loss over a large number of people paying premium.  And so, that’s why, some times, premiums go up even if you haven’t had a loss!

  • What am I even paying for here?!  My claim was denied!! This is one that really stresses my daddy out.  There are a lot of reasons that a claim could be denied, and he says that some times there’s a lot to explain.  Insurance can be difficult to understand, but basically, a claim would be denied if the policy does not provide the coverage.  Insurance does not cover everything, and that’s something that more people like my daddy need to help clients to understand.  For example, insurance is not meant to be a warranty – if your car breaks down, the cost of repair would not be covered.  Also, apparently, if the dog chews up his mommy’s glasses (who would do something like that?!), that also wouldn’t be covered.  Another thing to keep in mind is that not every policy is comprehensive, but in most cases, the coverage can be added.  For example, any surface water (overflowing rivers, heavy rains, an above ground pool that bursts [yes, that HAS happened!]) that comes into our house and does damage is NOT covered by homeowners; however, if you purchased flood insurance, it WOULD be.
  • This might as well be written in Chinese.  I don’t understand how insurance works at all! Daddy tells me that I should be more patient with people.  I just don’t get why people don’t want me to jump up and say hello, a few kisses to the face, that sort of thing.   He says that not everyone likes that, and not everyone understands that it’s my love language.  Insurance is kinda like that – it has it’s own language, and most people don’t get it.  What people need is someone who can translate all the mumbo jumbo and make some sense out of everything.  There IS a logic behind it, and all it takes is someone who is patient enough to sit down and explain it all, answer questions, etc.  There ARE answers out there, there ARE translators out there… it just takes some time, effort, and patience to find them and listen to them.

That’s all for me today.  It’s been a busy day, and I’m dog tired (enough already!!).  I hope you have a wonderful evening!

insurance sucks

Who did that?! Not me, that’s for sure…. *shhhhhh!*

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