Category: Personal

State Minimum Auto Liability: Is It Enough?

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State minimum insurance requirements are minimal. Most states demand less than $100,000 for bodily injuries and $50,000 for property damage. Some states require only $10,000 for property damage coverage.

How many cars valued at greater than $10,000 travel the highways? How many trucks carrying cargo are worth more than $10,000? $50,000? $100,000?

According to the 2010 census, the median family net worth exceeded $200,000. That amount includes houses, cars, savings, retirement funds, cash in the bank, college savings, and furniture and personal effects. Half the families are worth more, half have assets less than $200,000; all of it is hard earned.

If the family is underinsured for liability, their net worth is vulnerable to be seized in a lawsuit based on injuries or property damage caused by any family member driving a vehicle. The car owner and the car driver become parties to the suit.

Bodily injuries sustained in car wrecks devastate lives. People unable to work, the high cost of medical treatment, rehabilitation expenses, and the pain and suffering can only be compensated with money. The money comes from the insurance company or the liable party’s personal wealth.

Not convinced you need higher limits? Bankruptcy options are available?

Not all liabilities are released in bankruptcy. Many states have specific legislation disallowing debt reduction for certain accidents, most notably driving while intoxicated. Wage plans reduce take home pay by as much as thirty three percent. Many employers do not tolerate either bankruptcy or wage garnishments.

Still not convinced? How about a selfish motivation?

Other drivers are either uninsured or underinsured. Most insurance companies will not provide uninsured motorist coverage in limits greater than the liability limits of the policy.

Uninsured and underinsured motorist coverage from your policy pays on behalf of the driver who hits you if they are poorly insured. In a classic exercise of the golden rule, insurance companies only sell limits commensurate with the protection you offer others.

Proper limits of liability allow you to protect yourself from the improper coverage other people maintain.

So how much coverage is enough? What are reasonable limits of liability?

Ask your insurance professional. And consider this:

Your assets are your excess insurance coverage. This means that when the limits of your policy are reached, your assets are at risk.Excess insurance – umbrella policy – is available in one million dollar layers over your automobile and homeowners’ liability limits if those limits qualify – are high enough.Protect yourself against underinsured drivers by increasing your uninsured motorist coverage.

Vehicle Type has Impact on Insurance Rates

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The costs associated with purchasing a vehicle do not end when you pay the dealer. When you own a car, you must pay for gasoline, maintenance and car insurance. The cost of car insurance usually varies based on your driving history, age and the type of car you drive. While certain types of cars lower the cost of your insurance, others will raise it.

Car insurance companies determine the cost of your policy based on the risk of loss on insurance claims for the company. If the type of car you drive is associated with a larger number of expensive insurance claims, insurance companies will charge you a higher premium than it would charge if you were insuring a vehicle with fewer risks.

A car insurance company assesses the risk associated with your vehicle by examining past information about the vehicle and about the type of person that usually drives it. If drivers of the vehicle usually make more claims, the insurance company will assign a higher premium. Cars that are often associated with more claims are usually those driven for pleasure, such as sports cars. Drivers of pleasure vehicles travel faster and may pay less attention to safety regulations. Sports cars also tend to become damaged more easily.

On the other hand, if the insurance company determines that your vehicle type does not usually result in many expensive insurance claims, it may assign a lower premium. For example, minivan drivers typically make fewer insurance claims and thus pay lower insurance premiums. This is because minivan drivers are typically carrying multiple passengers, so they drive more safely. Drivers of minivans also tend to travel less during peak traffic times.

Along with the profile of the driver and the safety of the vehicle, insurance companies also look at the cost of repairing your vehicle when determining your premiums. If repairs made to your vehicle would cost more than repairs made to most other vehicles, it is likely that your insurance premiums will be higher than the premiums associated with those other vehicles. In most cases, the more expensive the vehicle is, the more expensive the cost of repairs will be. For this reason, cars that cost more to purchase also cost more to insure, especially if the car is worth more than $60,000.

Regardless of the vehicle you drive, your age and driving history will also affect the value of your premium. If you are a young or inexperienced driver, your rates will usually be higher than the rate charged to a driver with more years of experience. Likewise, if you have a poor driving history with many insurance claims, your rate will increase. 

Six Tips for Insuring Young Drivers

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Now that your blood pressure has recovered from giving your teenage driver her first driving lessons, it’s time to add him or her to your insurance policy. But teenage drivers and young adults are historically risky clients for insurance companies – and rates generally reflect that. What is the best way to manage the situation?

Here are some things you and your new driver can do to keep premiums affordable.

Tell Junior to Hit the Books

Insurance actuaries – the bean counters who actually figure out the odds and set insurance rates – have long known that there is a correlation between good grades and good driving records. Kids who have the discipline and focus to do well in school statistically also have the judgment and impulse control not to get into a lot of accidents.

Many insurance companies offer a discount to students with good report cards. If your youngster has a GPA of 3.0 or better, you may qualify for a discount on your insurance premiums. One idea: Compare the difference in premiums with and without the discount – and make junior pay the difference himself!

Keep it in the Family

Insurers like it when everyone in the family signs up. So much so, in fact, that many of them will discount premiums on family members. It is generally much more efficient to add a young driver to an existing policy than it is to get a separate policy.

Use Multi-Line Discounts

Many companies will offer a discount if you use them for multiple lines of insurance. For example, if you have your homeowners or renters insurance policy with a company, and your life insurance, consider placing your car insurance with the same carrier as well.

Get an Older Car

Older cars are generally less expensive to replace than a new car. This means that if your young driver totals a 10 year old car, the insurance company has to pay less to replace the car than if she wrecks a brand new one. This translates to much lower insurance premiums if you carry collision coverage. Don’t skimp on safety – but don’t needlessly pay too much for a car for a young driver, either.

Skip Collision Coverage

You may want to consider skipping collision coverage altogether. For older cars, the bigger risk isn’t the cost of the car – it’s the covering your teenage or young adult driver against liability. You can recover from the cost of a single clunker. You can’t recover from a $100,000 judgment. If your family can afford to replace an old car, consider dropping collision altogether and adding to liability coverage.

Avoid Tickets and Accidents

The last part seems obvious to adults; It may not register yet with the kids. Impress on them the importance of maintaining a good driving record. Moving violations get recorded, and reported to the insurance industry. Even a single accident or moving violation can cause your premiums to skyrocket. And a single DUI conviction? Better invest in a bus pass, because those are the only wheels your kid will be taking for years. Coverage is nearly impossible to find once a young driver gets a DUI. 

Understanding Tree Damage & Your Homeowners Insurance

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When a tree falls on a house, the first thing most homeowners wonder is whether their insurance will cover the damage. Fortunately, they do, and the coverage inclusions are clear. If a tree falls on a home or other insured property structure, a homeowners insurance policy provides coverage for the structure itself and the items inside of it. This type of coverage includes trees that fall due to hail, lightning or wind.

The fallen tree does not have to be owned by the policyholder for a claim to be approved. For example, if a tree owned by a neighbor falls over the property line onto a policyholder’s home, the affected homeowner’s policy will cover the damage. The affected homeowner must simply file a claim with his or her insurance company. Trees, branches and shrubbery have a tendency to become hazardous objects during storms, and insurance companies are aware of this fact. This is why they do not conduct extensive investigations to figure out exactly where the offending tree or shrub came from. Their duty is to assess the damage, figure out the reimbursement cost and issue a check.

In some cases, the insurance company may try to collect money from a neighbor’s insurer. This process is called subrogation, and it is usually initiated when the insurer feels that the offending tree was not kept well. However, this is the insurance company’s job. If the company is successful in proving the tree was poorly maintained, the policyholder affected by the damage may receive a reimbursement for his or her deductible amount.

If a tree falls on a home or insured structure, there is also coverage for the cost to remove the tree. This amount is usually between $500 and $1,000. Reimbursement numbers may vary from one insurance company to another. The amount also varies depending on the type of policy chosen. However, if a tree does not affect a home or structure, there is usually no reimbursement for damage or removal. Some insurance companies may extend special coverage for trees blocking driveways or handicapped ramps.

In addition to the previous coverage inclusions, standard homeowners insurance policies allow protection for tree damage due to theft, explosion, fire, lightning, vandalism, malicious mischief and vehicles owned by others. However, coverage is usually limited to a small percentage of the amount of insurance on the home or other property structures. As a rule, most insurers place a limit of $500 for any shrub, plant or tree. Shrubbery and trees grown for business purposes require special business insurance policies. To learn more about this type of coverage, discuss the options with an agent. 

Understanding the Basics of Insurance Deductibles

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To get the most out of a car or home insurance policy, it is important to understand the roles deductibles play. A deductible is the amount deducted from an insured loss. When a damage claim is filed, the deductible is the amount of money a policyholder must pay upfront. It may be a percentage of the policy’s total or a set dollar amount. Larger deductibles are associated with smaller premiums. To find the verbiage concerning deductibles, consult the front page of the auto or homeowners policy. Deductibles are subtracted from the claim amount. For example, if a person with a $500 deductible files a claim for $10,000, that policyholder will receive a check for $9,500. However, if that individual’s deductible is calculated using percentages, the amount may differ. With percentages, the variable is calculated from the total claim and then subtracted from the total.

In many areas of the United States, deductibles are increasing. This is especially true in states prone to hurricanes. Property damage deductibles work differently than those for other types of insurance. For example, a deductible applies each time a claim is filed for auto or homeowners insurance. However, a deductible applies only once each year for health insurance. There are some exceptions for damage-related insurance products. In some cases, hurricane coverage has a per-season deductible. The following points cover some of the most important deductible information.

Deductibles Do Not Apply To Liability Claims

While there is no deductible for a liability claim with a homeowners or auto policy, there is a deductible for property damage. Deductibles apply to claims made to the comprehensive policy. In homeowners insurance, deductibles also apply to damaged items inside the insured structure. However, they do not apply if a homeowner is sued or if a medical claim is filed by an injured visitor.

Higher Deductibles May Save Money

One of the easiest ways to cut expenses is to raise deductibles for homeowners and auto insurance policies. Increasing an auto insurance deductible from $200 to $500 reduces collision and comprehensive premium costs up to 30 percent. Raising the deductible to $1,000 may result in a savings of more than 40 percent. Remember this is the out-of-pocket amount that must be paid regardless of the amount of the claim.

Flood Insurance Deductibles Vary

Since flooding is not covered in standard homeowners policies, it is sold by the NFIP and private insurance companies. There are several different choices of deductible amounts for these policies. Keep in mind that some mortgage companies require homeowners to keep their deductibles under a specific dollar amount. Flood coverage for vehicles can be obtained with an optional comprehensive plan.

Various States & Companies Affect Deductible Amounts

Insurance is a state-regulated product, and insurers are required to follow their state’s rules. The laws affect how deductibles are worded in policies and how they are implemented. Since there are a wide range of deductibles found in each state, it is best to compare policies. Keep in mind that doubling the deductible may save more than 20 percent on the cost of a policy.

Percentage Deductibles Apply To Hurricanes, Hail & Earthquakes

Earthquake deductibles may be much less than 10 percent or as high as 20 percent of the structure’s replacement value. Insurance rates are higher in states such as Nevada, Utah and Washington. Consumers in these states may choose higher deductibles to save money. There are special earthquake policies for California residents. To learn more about areas prone to earthquakes, discuss them with an agent.

There are two separate types of wind damage deductibles. The first is a hurricane deductible, which applies to wind damage sustained from hurricanes. The second type is a windstorm deductible, which applies to damages sustained from any other type of windstorm. Hurricane deductibles depend on specific triggers. These are usually designated by the National Weather Service, individual states and insurers. The triggers apply when a storm is officially deemed a tropical storm or hurricane. To learn more about how these triggers work, discuss them with an agent. Some states allow set deductibles. However, communities in high-risk coastal areas may have mandatory percentage deductibles.

How Credit History Affects Auto Insurance Premiums

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Many factors are involved in determining an auto insurance rate. The age of the insured driver, the vehicle type and the individual’s driving history are all key factors. However, there is a more controversial factor used by auto insurance companies, which is individual credit history. It is important for all drivers to consider the following issues.

Credit Scoring
Insurers perform a credit check to determine an insurance credit score. They use FICO scores and credit history to assign a number. Each insurance company has their own method of calculating this score. By looking at specific items on a credit report, the insurer connects each one with either a positive or negative aspect of driving. They do this because many studies have shown that certain items on credit reports relate to the likelihood of people filing auto insurance claims.

Predictive Modeling
The practice of connecting various credit report items with auto insurance is called predictive modeling. While credit was not always used in the past, insurers still used a driver’s age and record to determine rates. For example, individuals who have several traffic accidents or tickets on their record are more likely to file claims in the future. In addition to this, statistics show that younger drivers have more severe accidents due to their lack of experience. These factors have remained true over the years. Many insurers feel that credit should be treated the same way as these other factors. However, it is much harder for consumers to understand their methods. Several court hearings regarding this practice have ended with insurance companies being able to prove that specific credit items really do relate to insurance claims.

Credit Considerations
Each company has rules for what aspects of credit should be used to calculate insurance rates. As it is with the FICO calculation formula, insurance companies assign a specific percentage to various credit items. While the aspects they consider are similar to the credit bureaus’ considerations, the percentages they assign are much different than the FICO method. The common factors insurance companies consider are current debts, types of credit, payment history, length of history, account balances, recent inquiries and bankruptcies.

Improving An Insurance Credit Score
By working on the areas of credit most companies review, it is possible to improve a credit insurance score. Be sure to keep balances low, pay all bills on time, keep old accounts open and close retail store accounts. It is also important to avoid applying for several new credit cards. As a rule, insurers check an insurance credit score every one to three years. Individuals who are working on improving their scores should ask insurers to recheck them before renewing a policy.

Reviewing Individual Credit
Some items on a credit report may be inaccurate. People who have common names often see items that belong to other people with the same name. In addition to this, some people experience the nightmare of identity theft. When this happens, there may be a long list of inaccuracies on a credit report. Be sure to dispute them. If identity theft is suspected, contact the major credit bureaus directly. In some cases, it is possible to receive an exception from an insurance company while a report is being updated. For any concerns or questions about insurance credit scores, discuss them with an agent.

Improving Road Safety with a GPS

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There is plenty of controversy about how safe GPS devices are. Whether they increase or decrease safety depends on the driver. However, when used correctly, a GPS can be a great safety addition to any vehicle. The following reasons show good examples of why drivers are safer with a GPS system.

Drivers know where they are going. Lost drivers are usually distracted and dangerous additions to the road. They speed up, slow down and spend more time looking at signs than watching the road. When a GPS is used correctly, drivers can focus on the task of driving while the GPS navigates. If a turn is missed, the GPS will automatically recalculate the route to compensate for it.

Driving at night is safer with a GPS. Most people find it more difficult to drive at night or in low-visibility conditions. Fortunately, a GPS has the ability to warn the driver of upcoming turns or ramps before it is time to use them. The map previews are especially helpful for driving on dark back roads.

There is no need to deal with awkward paper maps. Juggling large paper maps and trying to refold them is a difficult task. Trying to read these maps while driving creates several hazards. Having a passenger try to read the maps may not always be beneficial. This is why it is easier and safer to get a GPS device.

There are special safety features. Hands-free features allow for calling the police while driving. There are also features for locating nearby hospitals, good repair shops and a wide variety of other destinations.

It is easy to choose the right lane. Some streets and freeways are confusing. Certain lanes may turn into exits, and congested traffic makes such situations worse. A good GPS system will tell drivers which lane to stay in, which exit to take and when to turn.

How To Turn A GPS Into A Safety Aid
The first driving task any person should accomplish is to be aware of his or her surroundings. By following some simple rules, drivers can stay aware and maximize the safety features of their GPS devices.

Learn to use the device before taking off. Although most people learn the basic functions before getting on the road, very few thoroughly learn the overall system. Beginners should practice using the GPS and become comfortable with the touchscreen. Make sure the features are optimized for visibility. One mistake many beginners make is keeping their eyes on the screen too long.

Never program the device while driving. Every start-up screen and safety manual reiterates this important tip. Enter the destination prior to departing. If it is necessary to change or cancel the destination while driving, pull over to a safe place to re-program it. Fortunately, some newer devices prohibit re-programming while the car is in motion.

Mount the GPS device in a safe place. When choosing a spot for the GPS, make sure it does not conflict with important sight lines. Positioning it near the dashboard is a good idea.

Always rely on the voice directions. While it may be necessary to occasionally glance at the map, try to rely mostly on voice directions. Avoid staring at the map. If it seems confusing, pull over to study it. 

How to Protect a Vacant Home

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When the summer season approaches, many families and couples start planning their vacations. Whether the destination is near or far, it is important to make sure the home is properly protected. Locking the door and setting the alarm is not enough. The following five tips provide useful information for making a vacant home look less attractive to criminals.

1. Make the house look occupied. Although the home will be vacant, it is important to make any unwanted visitors think twice. If criminals think someone is home, they are much less likely to break in. Purchase timers for several wall outlets. By plugging lamps into these timers, it is possible to program the lights to turn on and off randomly throughout the day. Many DVR systems turn the television screen on when they begin a scheduled recording. If this is the case, set the DVR to record random movies and shows. Another way to make the home less attractive is to set up music to play at different times.

2. Have a neighbor check on the house. Everyone should make friends with at least one person or family in the neighborhood. Since most homeowners want to make their surrounding environment as peaceful as possible, they are usually willing to keep an eye on a vacant property. In addition to watching for burglars, they can watch for smoke or other serious problems with the home.

3. Keep windows, doors and all openings closed and locked. While this tip may seem like it would fall under the category of common sense, many homeowners forget to close a window or lock a door before leaving. Even a window that is slightly open may attract a criminal. When the home is vacant, there is no reason to leave any windows or doors unlocked. If a neighbor will be feeding a pet or bringing in the mail, supply that individual with a key. Never leave even a side door unlocked. Burglars also know that keys are hidden in fake rocks, under doormats or on windowsills, so avoid leaving extra keys out.

4. Hold mail and package deliveries. I:t is best to request a hold for packages and regular mail. A package sitting on a doorstep for a long period of time will look very attractive to a thief. Many criminals look through mailboxes for cards containing money, statements with personal information or any other items of interest. It is possible to fill out a convenient hold form online for regular mail.

5. Activate the security system. If the home does not currently have one of these systems, get one before leaving for vacation. In addition to sounding sirens and alerting law enforcement, they detect carbon monoxide and several other problems in the home. There are also wireless systems, which will still alert law enforcement officials if power cords are cut.

Vacations provide great opportunities for families or couples to enjoy time together. However, burglaries and disasters in the home have the potential to cast a pall on these happy memories. They also create needless hassles and expenses. Before taking off for vacation this year, be sure the house is ready.

Making your Smart Phone “Insurance Smart”

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You have the phone and the capabilities that come with it. Using the phone to manage all of your insurance affairs is not only smart, it will put you ahead of the game if you need to access your insurance information or if you end up having a claim. There is no better place than having all the information and tools on your smart phone because it is likely with you at all times. The best news is, the resources are there and putting in place what you need is a snap.

The first thing you should do is to see if your insurance company has an app for your phone. If they do, downloading such an app is a no-brainer. These apps are available as a free added value service to you. The best part is that most of these apps have a number of capabilities. This includes nearly everything from accessing your policy information to submitting a claim and everything else in between. For example, if you get into an accident, some apps included the capability to take photos and submit them along with a claims form you complete right on your phone. This means you can submit a claim within minutes after the accident happened, along with all the photos documenting the incident.

While reporting a claims incident is probably the most valuable advantage of these apps, another advantage is having access to your policy information anytime you need it. What is your policy number? When does your policy renew? When is your next payment due? How much coverage do you have? All of this is right at the tip of your fingers. For example, if you need your policy number and information for your job or you are driving kids on a field trip and the school needs it, these apps make it easy to access all this information.

While most insurance carriers do have apps, even if your carrier does not have an app, the phone itself can be a valuable resource. For claims situations, the phone’s camera is just about the best mobile documentation tool you can have. Also, if you are away from home, the ability to connect to the internet to look up resources such as the nearest towing company, the insurance company’s website, and of course your agent’s phone number can be your greatest asset. Best yet, you can use the phone’s map to get directions to the closest place you may need to get to.

In addition to insurance company apps, there are a number of other applications that may be available. One example is a home inventory app that will help you to setup and organize photos or video of your entire home inventory. This can come in handy in the unfortunate event that you have a fire or are burglarized, as insurance companies will need an entire inventory to complete forms when processing the claim. Another example of a helpful app is a document storage and sharing app such as box.net or dropbox.com. These apps allow you to store and share documents and images virtually in what is referred to as a “cloud” format. This basically means that you can upload and save images from a computer to the cloud, and then you will have access to those images from your smart phone or any other computer.

Investing a little initial time to download and setup apps and other resources to make your phone insurance smart is well worth it. It will not only save you time when you need this information, it will allow you to be significantly ahead of the game, even possibly being able to provide enough evidence to prove you are not at fault in an auto accident. You are 95% there by having a smart phone, and the benefits are too great not to take that next step in using the insurance-ready resources that are available.

Important Fire Safety Tips to Avoid A Disaster

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In a very short amount of time, a fire can accelerate from a small flame to an out-of-control blaze. Fires destroy thousands of homes in the United States each year, so it is important for all homeowners to take steps to prevent them. It is also important to know what to do when a fire breaks out and how to control it. Research shows that almost 80 percent of structural fires happen in peoples’ homes or apartments. Almost all of these fires are preventable, so fireproofing a home is the most important step to take.

There is much more to fireproofing a residence than purchasing a fire extinguisher and testing smoke alarms regularly. For increased safety, consider the following suggestions:

For Bedrooms
– Replace any mattresses made before 2007 with new ones. The Federal Mattress Flammability Standard was enacted then, and it was made to increase the manufacturing safety standards.

– Avoid using space heaters or electric blankets that are not approved by leading laboratories.

– Make sure electrical cords are not trapped against walls or under objects where heat commonly increases.

– Never put clothing or textiles on top of lamps.

– Make sure closets and other storage spaces do not have loose papers or other flammable materials lying around.

For The Kitchen
– Never leave food unattended in the oven, on the stove or in other kitchen cooking devices.

– Make a habit of using timers for cooking food.

– Avoid leaving flammable items on kitchen counters. Paper towels, cleaning supplies, oven mitts and shopping lists should be stored in safe places.

For Appliances & Electrical Outlets
– Leaving any appliance on increases the risk of a fire, so never leave the home without making sure all appliances are off. This also includes washers, dryers and dishwashers.

– Frequently clean stoves, change furnace filters, clean vacuum filters and empty dryer lint traps.

– Check the cords of fixtures and appliances frequently. If they are frayed, they should be replaced.

– Avoid plugging too many items into one electrical outlet or power strip.

– If fuses blow several times in a short time span, call an electrician immediately.

– Have the home’s wiring examined frequently. This is especially important in older homes, attics and crawl spaces where insulation can be ignited by sparks.

Unfortunately, even the most careful homeowners may experience a fire. Lightning could strike, and a burning tree or bush could engulf a home in flames during a dry lightning storm. For this reason, it is important to have ample insurance coverage. Homeowners and renters should discuss these options with an agent.