Month: March 2014

You Maintain Your Car, But What About Your Car Insurance

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Your car’s performance relies on a program of regularly scheduled maintenance, and so should your car insurance. In the same way that your car needs to be tuned up for it to operate safely and efficiently, your car insurance needs to be periodically reviewed to ensure it continues to provide the coverage you need.

When you review your car insurance, you should pay careful attention to the following:

·   The Declaration Page – This is usually the first page of the policy. It shows the insured’s name and address, policy dates, and a summary of the policy terms, the coverage limits and what is covered. You need to review and update the information on this page because it affects your coverage needs and the cost of your premiums. Never overlook any updates that need to be made, no matter how seemingly insignificant.

·   The Insuring Agreement – This specifies what the insurance company has agreed to cover in exchange for the premium. An insurance policy begins by declaring what it covers and then proceeds to restrict, limit and exclude coverages. You can’t just read the insuring agreement to understand the coverage your insurer is providing. You must read the entire policy and refer back to the insuring agreement. This will help you identify coverage gaps.

·   The Types of Coverage – The types of required coverage and minimums vary from state to state. The level of coverage is also affected by the age and value of your car. However, there are four types of common coverage that you should include in your insurance assessment.

The first is liability coverage. This protects you if you hurt someone or damage property while you are driving. As you accumulate more personal wealth, it is imperative that you increase your liability coverage. Without sufficient liability coverage, you could have your hard earned assets seized to cover a judgment against you.

The second type that needs to be reviewed and updated is your medical payments coverage. This covers you if medical expenses are incurred by anyone involved in the accident regardless of who was at fault.

The third type is your Uninsured/Underinsured Motorist coverage. You will be extremely glad you upgraded this coverage if you are ever involved in an accident with a driver who has no insurance, has minimal insurance or is unidentified, as in the case of a “hit and run.”

The last type to be reviewed is your collision and comprehensive coverage. Collision covers damage to your car caused by an accident. Comprehensive covers damage caused by anything other than collision.  Both coverages are optional.  However, if you have a car loan or you are leasing a car, you will be required to carry both collision and comprehensive coverage. If you own your car outright, the decision whether to carry this coverage will depend on the age and value of the vehicle. 

Insurance Institute for Highway Safety Says Death Rates Double for Minicars

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Minicars have become increasingly more popular as fuel prices have risen. Because of their newfound popularity, the Insurance Institute for Highway Safety included them in their crash tests for the first time in 2006. The agency rated the cars for comparison of occupant protection in front, side, and rear crashes. What the Institute discovered from its testing is that driver death rates in minicars are higher than in any other vehicle category and more than double the death rates in midsize and large cars.

The results of the crash tests conducted by the Institute indicate which vehicles in each weight category provide the best protection in real crashes. This round of tests reveals big differences among the smallest cars.

Minicars weigh about 2,500 pounds or less. A typical small car weighs about 300 pounds more, and midsize cars weigh about 800 pounds more. A midsize SUV weighs 4,000 pounds or more, which is at least 60 percent more than a minicar weighs. In every vehicle category, the tests revealed that the risk of crash death is higher in the smaller, lighter models. This means that any car that’s very small and light isn’t a good choice in terms of safety.

Another objective of the testers was to find the minicars with the most crashworthy designs. The Nissan Versa scored best. It is slightly larger than the other cars tested by the Institute, which puts it in the small car classification. This is the next size class up from minicar. Still the agency included it in the minicar testing because the Versa is marketed to compete with minicars.

The Versa was the only car to earn the highest rating of good in all three tests. In the frontal test, its structure held up well, and there was minimal intrusion into the space around the driver dummy. The majority of injury measures were low. In the side test, the standard equipment side airbags prevented contact between the striking object and the heads of the crash test dummies.

The Honda Fit with its standard side airbags and the Toyota Yaris equipped with optional side airbags also earned good ratings in front and side tests. However, both cars failed to earn acceptable ratings for rear protection. The Yaris was rated marginal, and the Fit was rated poor.

The Hyundai Accent ranked lowest in overall testing. Researchers were especially concerned about its structural performance in the side test. Its standard airbags in front and rear seats provided good head protection. However, injury measures recorded elsewhere on the driver dummy revealed that a motorist in a similar type crash would be likely to sustain internal organ injuries, broken ribs, and a fractured pelvis.

Never Let an Intersection Be Your Crossroads to an Accident

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The Insurance Research Council estimates that 81 percent of all crashes occur in urban areas of which the most dangerous locations are busy intersections. Nearly 43 percent of all auto accidents that happen in a city are intersection-related.

Even though intersections can be hazardous, that doesn’t mean you have to be a victim. Just remember these common sense rules for intersection driving:

·   Never wait until the last minute to get into the lane you need for your next turn. Always change lanes well in advance of reaching the intersection. Put your turn signal on before making any turn.

·   Avoid speeding through an intersection. You need time to react if a motorist fails to stop for a red light or stop sign. You also want to be sure you have plenty of time to brake if pedestrians cross against the light.

·   Be aware of other vehicles changing lanes. Keep out of other
drivers’ “blind spots” where they cannot see you in their rear and side
mirrors.

·   Stop behind the marked crosswalk. This will allow other drivers to see across the entire intersection. It will also prevent you from hitting pedestrians.

·   Don’t enter an intersection when the traffic is backed up on the
other side. You could wind up getting stuck in the middle of the
intersection if the traffic doesn’t move.

·   Watch for cars speeding through intersections after a red light. If you are waiting at a red light, don’t floor the gas pedal the moment the light turns green. Instead, quickly look both ways before proceeding through the intersection. If a motorist coming from one of the opposite directions is trying to speed through before the light turns red, you could be hit if you rush into the intersection at the instant the light turns green without looking for oncoming cars.

·   Check for cars twice before pulling into an intersection at a stop sign. It is a common occurrence to stop at a stop sign to make a left-hand turn, look both ways, and see no cars coming. Only to find that once you have begun the turn, a car has come out of nowhere and is headed straight for you. If you check twice before proceeding, you will allow enough time for the car that was hidden from your view to clearly emerge.

Tips to Consider When Shopping for Auto Insurance

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There is no mystery about buying auto insurance. If you want to save money, you need to understand what factors influence your premiums. Once you understand these factors, you can put your new knowledge to work and find the best coverage at the lowest rate.

Here are some guidelines to follow when shopping for car insurance:

·   When you file a claim, the deductible is the amount of money you pay toward the loss before your insurance company pays the claim. If you accept a higher deductible, your premiums will be proportionally lower. It is important to be sure you can afford the out-of-pocket expense of the deductible you select.

·   If your car has a Kelley Blue Book value of less than $2,000, you’ll probably pay more for collision/comprehensive coverage than you would collect on a claim. Insurance companies use their own criteria to determine fair market value for vehicles; however, the Blue Book can serve as a good indicator of whether you should maintain your collision/comprehensive insurance. You can find these values at www.kbb.com.

·   If you own a car that suffers from a high theft rate, or is expensive to repair, you’ll face higher premiums. Buy a car that’s not a thief magnet and/or doesn’t require expensive replacement parts and your rates will be significantly lower.

·   “Sunday Drivers,” meaning drivers who use less than the predetermined number of miles on their vehicles each year, may be eligible for a discount.

·   Where you live impacts the car insurance rates you pay. Premiums in rural communities are generally lower than in urban areas. The increased traffic and higher incidence of crime that are hallmarks of city life, increases the risk that you will eventually file a claim.

·   Most insurers give discounts for air bags and other safety features.

·   Some states require insurers to offer discounts for cars equipped with antilock brakes. There are also insurance companies that offer standard discounts for antilock brakes regardless of the geographic location in which you live.

·   Additional discounts you may be eligible for include: insuring more than one car, insuring your home with the same carrier, having no accidents in three years, being a driver over age 50, taking driver training courses, and using antitheft devices. 

Maintaining Your Home’s Fire Alarm System

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One of the most important household safety techniques you can implement is the purchase and proper installation of an adequate number of smoke alarms in your home. The National Fire Protection Association (NFPA) offers the following facts regarding smoke alarms and fires.

* One-half of home fire deaths occur in the 6 percent of homes without smoke alarms.

* Homes with smoke alarms typically have a death rate that is 40 to 50 percent less than the rate in homes without alarms.

* In three of every ten reported fires in homes equipped with smoke alarms, the devices were not operational.

The NFPA offers safety tips regarding smoke alarms for you to consider.

* New batteries should be installed in all smoke alarms annually or when the alarm chirps to warn that the battery is weak.

* Smoke alarms should be tested monthly.

* Smoke alarms should be placed outside each sleeping area and on each floor of the home, including the basement.

* Smoke alarms should be interconnected, so if one goes off, they all go off.

* Smoke alarms should be replaced every 10 years.

Keys to Switching Auto Insurance Carriers

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There are many reasons to consider a change in auto insurance carriers. You may be unhappy with the service provided by your current insurer, or you may have found another insurer that offers better rates or service. If you review your coverage annually, you can be sure you continue to receive the best bang for your premium dollar.

It pays to shop around because in some states there can be a wide spread in the premium for the same coverage. That’s because insurers base premiums on the number of claims incurred from a particular coverage group. A coverage group can be drivers of the same age or who own the same type of vehicle. If the number of claims for your coverage group increases during a calendar year, your rates will also increase. If that happens, it makes sense to check with other carriers to see if better rates are available.

Canceling your old policy is usually a matter of writing your carrier and specifying the date coverage should be terminated. In some states, your new insurance agent will notify your former carrier for you. You will receive a cancellation request form that you must sign and return to your former insurer. Some companies will also request that you return the policy with the cancellation form. Be sure that you cancel your coverage in writing. Otherwise, the insurer will assume that you are still covered and when you fail to pay your premium, it will terminate coverage and report this to your state’s Motor Vehicle Department and the credit bureaus.  This can hurt your credit rating and your ability to obtain a new policy.

Before you cancel your old policy, be sure you have a replacement. Since most states require drivers to carry a minimum level of coverage, your former carrier will require you to provide proof of insurance before canceling your existing policy.

If you do plan to switch companies, the best time is when your old policy is up for renewal. In this way, you will avoid paying printing and start-up expenses associated with the renewal process. The renewal notice is typically sent out one month before the new policy period begins. Most states allow approximately one month after renewal to switch policies without penalty. However if you miss the deadline, you could be liable for a cancellation fee.

Keep in mind that standard auto insurance policies have a provision that allows you to cancel at any time. If you plan to cancel before your policy is up for renewal, the best time is at the end of a payment period. In this way, you won’t have to concern yourself with recovering the unused portion of your premium.

When You Shop for a New Car, Consider Safety Ratings

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Most people know that the federal government enforces certain safety standards for new cars. However, these are only the minimum standards a car manufacturer must satisfy in order to have its vehicles considered safe. Many automakers offer safety features beyond the required federal minimums. When shopping for a new car, you should look for a vehicle that offers the maximum safety features in your price range.

The following list of safety features should be considered when you are shopping:

·   Crashworthiness – This rating indicates the level of risk of death or serious injury if a crash occurs. Log on to the Insurance Institute for Highway Safety’s web site at www.iihs.org/searchresults.aspx?q=crashworthiness for more information about the various models.

·   Structural design – Look for a structural design that has a strong occupant compartment. The vehicle should have front and rear ends that buckle and bend in a crash to absorb the force of the crash. This keeps the occupant compartment from collapsing. If the occupant compartment collapses, the likelihood of injury increases significantly.

·   Size and weight – Larger and heavier cars are safer than lighter and smaller models. In crashes where smaller and larger vehicles collide, the larger vehicles drive the smaller ones backwards, which increases the forces in the smaller vehicles.

·   Restraint systems – Shoulder belts, airbags and head restraints are designed to work together with a vehicle’s structure to protect people in crashes. Shoulder belts keep you in place, reducing the possibility of your body slamming into something hard or being ejected from the vehicle. Airbags reduce the risk of the head and upper body hitting some part of the vehicle’s interior. They also distribute crash forces more evenly across your body. Head restraints keep your head from being violently snapped, which would injure your neck in a rear-end crash.

·   Anti-lock brakes – Conventional brakes may cause wheels to lock if you brake too hard. This can result in skidding and possible loss of control of the car. Anti-lock brakes pump brakes automatically many times a second to prevent locking and keep you in control. While anti-lock brakes help you maintain steering control, they don’t necessarily help you stop more quickly.

·   Daytime running lights – These are usually high-beam headlights at reduced intensity or low-beam lights at full or reduced power. These lights prevent daytime accidents because they increase the contrast between the vehicle and its background, which makes the car more visible to oncoming drivers.

·   Miscellaneous factors – Other design characteristics can influence injury risk. The structure of some small utility vehicles and pickups make them more likely to roll over during a crash. High performance cars tend to have higher-than-average death rates because drivers, especially young ones, speed when they are behind the wheel. You should examine the design features of any new car you are considering to be sure that they are appropriate for everyone who will be driving the car.

Three Questions to Determine Whether Your Home Is Properly Insured

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Homeowners are always being advised to update their property insurance annually because any home alteration or lifestyle change, such as marriage or divorce, can affect the amount of coverage needed. While it is important to complete that yearly review, it is equally important to know what questions you should ask your agent to ensure you have the right coverage for your circumstances.

According to the Insurance Information Institute (I.I.I.), there are three key questions you should always ask:

1.   Do I have enough insurance to rebuild my home? – Buying just enough insurance to meet your mortgage lender’s requirements could mean that you are inadequately covered should you need to rebuild your home at current prices. To have real protection, you need to consider the following types of coverage:

§      Replacement Cost Policy – A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.

§      Extended Replacement Cost Policy – This extends your coverage another 20 percent or more above your stated policy limits. This additional insurance can be extremely important if your home is one of many damaged in a disaster, because a widespread disaster can result in increased costs for building materials and labor.

§      Inflation Guard – This coverage automatically adjusts the policy limits for rebuilding costs as construction costs rise.

§      Ordinance or Law coverage – If your home is badly damaged and requires rebuilding under new building codes, ordinance or law coverage will pay a specific amount toward any additional costs involved in meeting the new code requirements.

§      Water Backup – This coverage insures your property for damage from sewer or drain backup. 

§      Flood Insurance – Standard home insurance policies do not include coverage for flooding. Flood insurance is available through the federal government’s National Flood Insurance Program (https://www.floodsmart.gov), but can be purchased from the same agent who provides your homeowner’s insurance. Make sure to purchase flood insurance for the structure of your house, as well as for the contents.

2.   Do I have enough insurance to replace my possessions? – Most insurers provide coverage for personal possessions equal to 50 percent to 70 percent of the amount of insurance on the dwelling. The best way to determine if this is enough coverage is to conduct a home inventory. A home inventory is a list of everything you own and the estimated cost to replace these items if they were stolen or destroyed.

You can insure your possessions in one of two ways:

a.            Cash Value Policy – This coverage pays the cost to replace your belongings minus depreciation.

b.            Replacement Cost Policy – This coverage pays the full cost of replacing your belongings at current prices.

3.   Do I have enough insurance to protect my assets? – Homeowner’s insurance provides you with basic liability coverage. This protects you against lawsuits for bodily injury or property damage that you, your family, or your pets may cause to other people. Liability insurance pays for the cost of your legal defense and for any damages a court rules you must pay, up to the stated limits of your policy. Most homeowner’s insurance policies provide a minimum of $100,000 worth of liability insurance. If the standard liability coverage isn’t sufficient, you may need an excess liability policy, which provides additional coverage over and above what is covered by your homeowner’s insurance policy.

Tips for Buying Homeowner’s Insurance

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Considering that for most people a home is their largest asset, they understand the importance of protecting their investment with homeowner’s insurance. What they may not know, however, is that insurers offer numerous discounts based on various factors ranging from the type of building material used to your home’s proximity to a fire station. Keep in mind that while multiple opportunities exist for premium discounts, not every discount is available in every state or with every insurance company.

When shopping for homeowner’s insurance, you should follow these tips:

·   Accept a higher deductible – When you file a claim, the deductible is the amount you pay personally toward the loss before the insurer pays the balance of the claim. Deductibles on most homeowner’s policies start at $250. If you raise your deductible, your premiums will be lower. However, before you accept a higher deductible, be sure you can afford the additional out of pocket.

·   Use one insurer for both your homeowner’s and auto policies – Most insurance companies offer multi-policy discounts.

·   Consider the cost of insuring any home before purchasing – The geographic location of your home has a significant impact on the amount you pay in premiums, especially if your home is located in an area frequently hit by natural events that cause large scale damage. The age of the house will also play an important role, as does the age of the electrical, heating and plumbing systems. Older structures, pipes and electrical wiring pose a greater risk.

·   Buy insurance coverage for your home, not the land it sits on – Never include the land value when you calculate how much insurance you need.

·   Be sure your home is safe and secure – Dead bolt locks, burglar alarms, and smoke detectors generally qualify you for premium discounts. Your insurance company may also offer an even larger discount if you install a home-security system. Check with your insurer to see which systems entitle you to a discount before proceeding.

·   Stop Smoking – Smoking increases risk of fires. Some insurers offer discounts if your family is tobacco free.

·   Ask about discounts for seniors – Retired people stay at home more, so they can spot fires sooner. Older people also spend more time maintaining their homes.

·   Review your policy each year – Any improvements you have made to your home should be reflected in your coverage. Talk to your agent about increasing your coverage as necessary.

Don’t Wait Until It’s Too Late to Dust Off Your Homeowner’s Policy

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If you’ve never thoroughly reviewed your homeowner’s policy, you could find yourself out of luck at your time of need. When you bought your policy, you assumed it would provide the necessary funds needed to recover from a disaster.  However, if you are unfamiliar with your policy’s terms and conditions, you may not have as much protection as you think.

The standard homeowner’s insurance policy includes four basic types of coverage:

·   Coverage for the structure of your home – If your home is damaged or destroyed by fire, lightning, windstorm, or other peril listed in your policy, your insurer will pay to repair or rebuild your home subject to the terms of your coverage. However, if the damage is caused by a flood, earthquake or mudslide, there would no coverage unless you had purchased a separate policy for these risks.

Most standard policies also cover detached structures such as a garage. Coverage for these structures is automatically provided at 10% of the amount of insurance you have on the structure of your home.  You can purchase additional coverage if necessary.

Do you know if your policy would provide enough coverage to rebuild your home?

·   Coverage for your personal belongings – Furniture, clothes, and other personal items are covered if stolen or destroyed by fire, wind or other insured disaster. Most companies provide personal belongings coverage equal to 50 to 70 percent of the amount of insurance you have on the structure of your home.  

High-ticket items like jewelry are covered, but only at minimal dollar limits if stolen. To insure each of these items for their full value, you would need to add a special personal property endorsement to your basic policy.

Trees, plants and shrubs are also covered under standard homeowner’s insurance for theft, fire, lightning, explosion, vandalism, and riot. They are not covered for damage by wind or disease. Limits are usually $500 per item.

·   Liability protection – This protects you against lawsuits for bodily injury or property damage that you or your family members cause to others. Liability coverage also pays for damage caused by your pets. Your insurer pays the cost of defending you in court and any court awards, up to the policy limit. You are also covered not just in your home, but anywhere in the world.

Liability limits start at about $100,000, but you should purchase more coverage. You can also purchase an umbrella or excess liability policy, which provides broader coverage, including claims against you for libel and slander.

Your policy also provides no-fault medical coverage if a friend or neighbor is injured in your home. Your insurer pays the individual’s medical expenses without a liability claim being filed against you. You can generally obtain $1,000 to $5,000 worth of this coverage.

·   Additional living expenses – This pays for any additional costs in the event you are temporarily unable to live in your home because of a fire or other insured disaster.  Many policies provide coverage for about 20% of the insurance carried on the structure of your home.

In addition to reviewing your homeowner’s coverage, you should keep updated records of your property in a safe location that is easily accessible. The Insurance Information Institute offers free software you can download to create a home inventory. Log on to www.knowyourstuff.org.

Finally, try to review your homeowner’s policy with your insurance agent annually. Your agent can help you determine if your coverage is still adequate for your needs.