Lower Your Auto Insurance Costs

Image by shainelee via FlickrI remember listening to a talk radio program on the AM dial about a year ago where the host stated that he chose not to participate in the economic recession.  Now he spends a good portion of his program showing empathy to his listeners who have been affected by the economic downturn.  No matter where we live, our neighbors are tightening their belts, spending less, and pinching their pennies.  As a father of five young children, I find myself doing the same.  Here are some ideas that may help you save money on car insurance without having to shop around.

Automobile insurance premiums often take a big bite out of a family’s budget. You may, however, be paying too much for this coverage. The following are several approaches you can use to reduce your auto insurance costs.

• Choose higher deductibles, particularly if you currently have a low collision or other-than-collision deductible, such as $100 or $250. Increasing your deductible from $250 to $500 or $1,000, for example, can reduce your collision and other-than-collision premium by 15 to 35 percent.
• Eliminate collision and other-than-collision coverage on older, less valuable cars. If your car is worth less than $1,500, it may be wiser and cheaper in the long run to just retain this physical damage exposure. Used car valuations are available online at Kelley Blue Book.
• Maintain an excellent credit record, since insurance companies are increasingly using credit scores to price auto insurance policies. Consumers with poor credit often pay more for auto insurance. 
• Buy a “low-profile” automobile. Before you purchase a new or used car, check into the auto insurance costs. Automobile models that are expensive to maintain and have higher theft and collision frequency rates tend to have higher insurance costs. 
• Take advantage of multipolicy discounts by keeping your homeowners and auto policy with one insurer. Likewise, take advantage of multicar discounts by having all autos on one insurance policy.
• Seek out other auto insurance discounts (which can vary by state and by insurance company), such as defensive driving, good student, low-mileage auto, alcohol awareness training, air bags, antilock brakes, claim-free experience, and long-term customer. 

Is Your Flood Insurance Ending?

I returned to work today from a long family vacation.  During the course of our journeys we had the opportunity to drive on Highway 2 near Nebraska City, where one lane of the road was underwater due to flooding of the Missouri river.  We later had to detour because on highway 136 near Alexandria, Missouri, because the the road leading Keokuk, and  a bridge over the Mississippi river, was under water.  While these areas are prone to flooding and it makes obvious sense to buy flood insurance, other places aren't so obvious, yet FEMA, with flood mapping help from the US Army Corps of Engineers and others, places many housing tracts in 100 year flood plains, thus requiring homeowners with mortgages to purchase flood insurance.  Wise property owners with buildings in flood plains will purchase this same insurance whether or not they have a mortgage.
I witnessed the destruction of flooding earlier this year when a flood hit my hometown of Genesee, ID in January 2010 due to frozen ground, melting snow, and heavy rains.  If you think a flood can't happen to you, think again.

One of the brokers that I utilize recently sent me an e-mail stating that State Farm Mutual has announced that effective October 1, 2010 they are getting out of the National Flood Insurance Program business.  This means that hundreds of thousands of insureds will need to find a new company for their flood insurance.  Do you have flood insurance with State Farm Mutual?  If so, please allow me to serve you and place your flood insurance with one of our flood insurance companies.

How do you do this?  Give me a call at my Clarkston, WA office; (509) 758-5529 or e-mail me.  I will ask you for a copy of your declarations page, the year the home or building was constructed, and its replacement cost value.

It really is that simple.  I look forward to serving you!

NEED FLOOD INSURANCE TODAY? SENATE SAYS, NO WAY!

For the fourth time, the US Senate has let the funding for flood insurance lapse.  What does this mean for the economy?    Basically it puts a halt to any loans that are in process, where the loan collateral is in a flood zone requiring flood insurance.  You can read more about the lack of funding here: http://bit.ly/dAQhu5

Why is it so hard to fund the National Flood Insurance Program?  The answer is political and probably better left off this blog!

So what can you do if you need flood insurance now?  Unfortunately, not much!  You can wait until the Senate reconvenes and decides to fund flood insurance or you can try to convince your mortgage broker to accept one of the alternative flood insurance offerings available through Lloyds of London or other brokerage houses only available to those who live in some states.

Frustrated?  Call your Senators through the US Capitol Switchboard: (202) 224-3121 and let them know.
 

KEEP YOUR DIRECTORS & OFFICERS COVERED

A recent increase in corporate bankruptcies has brought a new awareness to the quality of Directors & Officers (D&O) Insurance coverage.  D&O insurance was created to provide coverage for individual directors and officers to help companies attract and retain talented board members.  However, over time it has evolved to include coverage for the entity itself.  D&O coverage is now purchased by non-profit and for-profit corporations alike and typically provides three basic types of coverage:

• Side A -   This coverage provides protection for board members and executives where the underlying claim is non-indemnifiable.
• Side B - Provides coverage for the company as it indemnifies named directors and officers.
• Side C - Grants coverage for the company for claims brought directly against it, such as securities law claims.

Unfortunately, many D&O policies do not provide separate limits of coverage for the different sides, so all claims are paid from the same limit.  Who does this leave without coverage, all too frequently, it is the actual directors and officers on the board of directors who are left over once the limits of coverage have been exhausted.

How can this be prevented? Among other solutions, always make sure that Side A coverage has its own separate limit.  This way, once the entity has exhausted its own limits, Side B and/or Side C,  it cannot reach across and take the limits from the directors and officers.  Another plus is that the the deductible or retention can usually be much lower on Side A coverage too!

For a great article on how bankruptcies can hijack your D&O coverage and other ways to protect yourself, check out this article from American Agent & Broker magazine.  http://bit.ly/acj5T1

PROPERTY INSURANCE AND THE BLACK HOLE OF HYPERINFLATION

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Listening to the experts, it sounds like most financial analysts agree that when the economy does begin to recover, inflation will probably be significantly higher than what we’ve seen in the past.  This hyperinflation can have a tremendous impact on insurance claims.  In the event of a property loss, depending on how the policy is written, if a property is significantly underinsured, the insured party will not receive replacement cost value, rather the depreciated value of the property minus the underinsured portion.  This could result in people only receiving pennies on the dollar at the time of loss.

Although you can schedule an annual increase in property insurance coverage (I see most at 4%), this solution is inadequate for periods of exponential inflation.  So what can you do?  Write letters to you insurance carriers suggesting that they develop a solution.  

Although there is currently no great solution, I thought this worth mentioning so that you can draw upon it if the future brings a period of hyperinflation.

$$$ WHERE DO HEALTH CARE DOLLARS GO? $$$

I attended a luncheon last week with a fantastic guest speaker, Scott Kreiling, President of Regence Blue Shield of Idaho.  He shared some fantastic information regarding healthcare costs.  I will try to disseminate it here and share some links to their web site where additional information can be obtained.

...and here is another chart from their website:

Although this information is interesting, it gets even better.  The folks at Regence have established an education plan to help us realize where the real cost of insurance comes from, http://www.whatstherealcost.org/ and they share steps that we can take to personally reduce the overall cost of health insurance.  www.regence.com/industry/what-drives-up-health-care-costs.jsp#

Regence also provides a website for their customers to help them set healthy goals and accomplish them.  www.MyRegence.com

Purchase Proper Watercraft Coverage for Your New Boat

Spring is often the time of year when boat lovers start to consider purchasing a sailboat or powerboat. Many people, however, are unaware of the significant loss exposures associated with boat ownership, and some people mistakenly believe that there is coverage available under their personal auto policy (PAP). Virtually all PAPs, though, do not provide any liability or physical damage coverage for boats. Other people may look to their homeowners policy for coverage. But most homeowners policies only cover losses arising from certain low-valued or low-powered boats. You should thus contact us before buying a boat to discuss the proper insurance protection for it. Consider the following tips to assist you in this process.

• If you purchase a boat valued over $1,500, you probably lack proper coverage under your homeowners policy for physical damage losses to the boat itself. A separate watercraft or boatowners policy is necessary to cover the physical damage to boats over this value. 
• If you are considering the purchase of a sailboat, inquire about its length. If the length is 26 feet or more, there is no liability coverage under your homeowners policy. For motorboats, there are severe horsepower restrictions under the homeowners policy for liability coverage. For example, only insureds who own or lease boats with outboard motors of 25 horsepower or less have liability coverage under most homeowners policies. Yet most powerboats have motors with horsepower far exceeding this amount. This liability coverage restriction also necessitates the purchase of separate watercraft insurance. 
• Ask us about the types of boats you are considering. Some insurance companies, for example, decline to insure personal watercraft such as jet skis and wave runners, since some of these crafts can reach speeds of 60 mph. According to the U.S. Coast Guard, personal watercraft account for a disproportionately high number of accidents. Many insurance companies also refuse to cover houseboats, homemade or kit boats, competition bass boats, and speedboats. You may have to pay a steep premium through a specialty insurance company to insure these types of craft. 
• Be wary of purchasing older watercraft. Many insurance companies reject boats over 15 or 20 years of age because they experience a higher loss frequency than newer boats. You may have trouble finding insurance coverage for older boats or end up paying an extremely high premium. 
• If you do purchase an older boat, consider ordering a marine survey or inspection of it prior to the sale. Marine surveys point out deficiencies in watercraft that may cause you to reconsider the purchase or renegotiate its price. 
• If you don't already have one, procure a personal umbrella policy in addition to a watercraft policy, particularly if you purchase a speedboat, a boat designed for water skiing, or some other craft with a higher potential to cause damage or loss of life. Umbrella policies are relatively inexpensive, and since most forms do not have limitations with respect to watercraft, they will provide excess limits above the liability coverage in the watercraft policy. In addition, the watercraft liability limits should meet the underlying limits requirements of any applicable personal umbrella policy. Lastly, you should use the same insurance company that writes your homeowners and personal auto policies for your personal umbrella policy. 

DECREASING HOME VALUES - I CAN INSURE MY HOME FOR LESS, RIGHT? -WRONG!

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Economies are always changing and home values fluctuate with them.  During the past couple of years, many homes have decreased in value.  Looking for the bright side, I am now asked by optimists if they can insure their homes for less.  After all, this makes sense, right?

No way!

Remember that most home insurance pays for your home to be rebuilt just as it was.  While home values have been decreasing, the cost of construction has continued to rise.  (Could this be due to continued low interest rates?)

The key thing to remember here is: Your limit of property insurance should be based on the cost to replace it, not the current resale value.

To read a great article on this topic, click  here.

BEST DOGS FOR HOME INSURANCE

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I received information from Travelers Insurance today about dogs.  They say that the top five dogs to own (for insurance purposes) are:

• Shih Tzu
• Poodle
• Dachshund
• Bulldog
• Boxer

Here are some additional dog facts:

An American has a one in fifty change of being bitten by a dog each year.
Approx. 800,000 dog bite victims (1 in every 6) require medical attention annually in the US.
Industry-wide, over 1/3 of homeowners's liability claims come from dog bites
The average cost of a dog bite claim was $24,461 in 2008

Your insurance agent should remember to ask about dogs or pets in the household and review your insurance company's list of ineligible breeds in their eligibility guidelines.

You can read more about risk management with dogs in a previous posting, TAKE STEPS TO PREVENT DOG BITES.

DO I REALLY NEED TO INSURE HIRED & NON-OWNED AUTOS?

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Hired and Non-Owned Auto coverage is a type of insurance often overlooked by businesses, especially companies that don't have insured vehicles.  However this coverage is cheap, and neglecting to add it to your policy before a car accident can be very costly.  Ask yourself the following questions:

1. Might any of your employees run errands or make deliveries for the business using their own autos?
2. Is there a chance that you might borrow an employee's vehicle for any reason?
3. If you are unavailable (or on vacation) will an employee use their vehicle to run errands , make bank deposits, or anything else?
4. Do you foresee a need to rent a vehicle for business purposes?  (I saw my local FedEx guy driving a rented Budget truck today)
5. Will you ever pay someone to drive their vehicle for your business?

If you answered yes to any of these questions, then you need Non-Owned and Hired Auto Insurance.

For a really great article on Lessons Learned from Non-Owned and Hired Auto Insurance, click Here.
For information on Driver Training and Motivation, click Here.
For information on Driver Eligibility Criteria, click Here.  (This links to driver criteria for Philadelphia Insurance)

BUILDING, RENOVATING, REMODELING AND RESTORING: NAVIGATING BUILDERS RISK INSURANCE

Home construction was delayed by tornado damage  (Image via Wikipedia)

As a risk manager for numerous property owners, I am frequently encountering situations where Builders Risk insurance would benefit my customers.  Having recently left the world of normal people to enter the realm of insurance and risk management, I can still remember how confusing insurance can be.  Hopefully this will help someone to navigate the waters of Builder's Risk insurance.

For anyone who has ever decided to build, renovate, remodel, or restore a building, Builder's Risk insurance is generally a requirement of the loan.  However, even those who are working with their own funds can benefit from purchasing a Builder's Risk policy.

Here are some things that you can put together to help your agent provide you with the best Builders Risk coverage.

1. Projected Costs:  Maintaining a list of cost estimates and keeping your insurance agent updated as these costs change can help you ensure adequate coverage.
2. Project Details:  In providing detailed information, you can provide will help you agent "sell" the project to an underwriter.  Not only will it help you communicate better with your agent, it may help the underwriter conceptualize the project.  Underwriters are more likely to discount premiums when they understand what they are insuring.
3. Contracts:  Contracts frequently require certain limits of insurance.  In giving your agent complete copies of all contracts involved with a project, they will be able to provide you with appropriate insurance solutions.
4. Projected Dates:  It is paramount that your insurance agent is kept informed of projected start and end dates.  Shopping your insurance can take time and good agents will utilize that time to provide you with a combination of the best coverage and pricing.  Keeping them informed of your projected starting and completion dates will help them stay on track.
5. General Contractor:  Who is your general contractor?  Why did you select them?  A brief description of your general contractor and their track record can help "sell" an underwriter on your insurance and save you money.
6. Other Structures at the Site:  What other buildings or structures are at the site?  Will any of them be at risk of becoming damaged due to this project?  What is being done to protect the other structures?
7. Safety:  Provide your agent with a list of any safety precautions that have been or will be made.  Some items to consider are: lighting, fencing, and security.  Although, these features may reduce your premium, more importantly, they should reduce your stress level when the project is underway.
8. Storage of Building Materials:  Where will materials be stored before they are installed?  The basic ISO coverage for these materials only covers them if they are within 100 ft. of the scheduled location.  Additional distance from the site and additional storage locations may be added by endorsement.  What measures will be taken to prevent theft of these items?
9. Soft Costs:  When unforeseen events happen that delay the completion date of your project, additional expenses are usually incurred. These may be: additional interest charges on loans, advertising expenses, additional contractors costs, real estate taxes, consulting fees, equipment rental, premiums for extended insurance terms, refinance charges, and architectural and engineering fees.  Essentially, soft costs are all costs associated with a project except for labor and materials.

When should you shop for Builder's Risk insurance?  If possible, you should begin shopping three to four months before the projected start date.  This will allow your agent time to understand the project and to approach multiple insurance carriers, allowing them to compete for your business.  Be sure to keep your agent informed of any changes to your start date so that they can time the inception of the policy accordingly.The policy should begin when construction or demolition begins.  Once work is being performed, Builder's Risk insurance is the appropriate form of insurance.  Here's a handy flow chart to illustrate this.

When the project nears completion, make sure that your agent is ready to provide you with Property and General Liability insurance to take the place of the Builder's Risk insurance.

AM I OVERPAYING? (From: Insurance: The One Question Everyone Asks)

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“Am I overpaying?”

That’s a question that every consumer asks from time to time. Everyone is curious and concerned as to whether he or she is getting a good value for the money, whether it’s for a candy bar, a car or an airline ticket.

It’s a good question to ask about insurance, too. After all, Americans spend a lot of money on insurance for homes, autos and businesses. In 2008, American drivers spent $161 billion for personal automobile insurance, reported the A.M. Best Co., an insurance research and ratings firm.

This large market for auto insurance is highly competitive. Consumers play a large part in keeping insurance rates competitive by virtue of shopping—whether online, by telephone or on the World Wide Web. More than one of four (about 28 percent) of auto insurance buyers shopped around for car insurance in 2009, reported J.D. Power & Associates in its 2009 national auto insurance study.

But consumers aren’t the only ones shopping around for auto insurance. So too do independent insurance agents, including Trusted Choice® insurance professionals.

On average, Trusted Choice® agents provide consumers with property/casualty insurance options from eight different insurance carriers, reported the 2008 agency universe study conducted by Future One, a collaboration of the Independent Insurance Agents and Brokers of America (the Big “I”) and leading independent agency companies. For automobile insurance, those agents may compare rates and coverages at even more insurance companies, through their use of software that allows them to compare multiple policies and multiple carriers.

For auto insurance buyers, research showed that independent agents rank most highly on the most important element of customer satisfaction. The J.D. Power study measures customer satisfaction with auto insurance companies across five factors (in order of importance): interaction, policy offerings, billing and payment, price and claims. Insurers who sell their auto insurance products through agents performed “stronger in the interaction factor than do direct insurers,” reported J.D. Power.

Overall, customer satisfaction with auto insurance companies reached a five-year high in 2009, reported the J.D. Power study. The biggest improvement in satisfaction among the five factors has been in price. Interestingly, 42 percent of customers in 2009 reported that their auto insurance premiums declined without switching insurers.

Are you overpaying for auto insurance? Thanks to a competitive market that includes Trusted Choice® independent insurance agents, the answer probably is no. If you’re not sure, ask a Trusted Choice® agency to review your options.

source: TrustedChoice.com, October 2009

SAVING MONEY ON INSURANCE: CAN IT BE DONE?

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Saving Money on Insurance: How Can It Be Done?

In the throes of an economic recession, millions of consumers today are cutting back on discretionary spending—and are even tightening up on the necessities. Now is an excellent time to review your insurance coverages with your Trusted Choice® independent insurance agent to find ways to cut costs while still protecting your family or business.

The premiums paid for insurance are a tremendous value. For instance, for the cost of several hundred dollars annually, a homeowners insurance policy provides a family with the means to rebuild its home and reimbursement for the cost of temporary housing should the home be destroyed in a fire.

To consider how to cut expenses, it’s helpful to take a step back. Consider anew what insurance premiums are paying for the transfer of risk. Insurance is a unique tool that allows consumers and business owners (through a financial transaction and a legal contract) to transfer risk from the consumer or business owner to the insurance company. If you transfer less risk—either by reducing the risk overall, or retaining more of the risk yourself—the insurance carrier will charge less.

Your Trusted Choice® insurance professional can help you consider two important questions if you want to cut costs on insurance:

1. What risks might I be paying to insure that I can assume myself?

The risk profile of a family or business changes over time. It’s important to share with your Trusted Choice® agent if the family or business situation has changed recently.

One thing that changes is the financial risk a family faces as children are born and grow. Parents of newborns face a lot of financial risk, since they face 18-plus years of raising that child and, for many, paying for a college education. Life insurance is the common way to protect against the risk of a parent dying while a child is in school. Yet, when the child graduates, a parent might reduce the amount of life insurance they own—and thereby reduce the amount of premium they pay. Inform your insurance agent if these changes are occurring for you.

For homeowners insurance policies, the first place to look to trim expenses is the deductible, which is the amount of money the policyholder must pay before the insurance company starts to pay a claim. The higher the deductible, the lesser the premium will be for the policy. A consumer with a $500 homeowners deductible can save as much as 25 percent by raising it to $1,000, reports the Insurance Information Institute. A policy with a higher deductible is less likely to have claims, in part because consumers that bear more risk tend to be more careful and have fewer claims.

Auto insurance customers can ask their Trusted Choice® agent about whether they can save money on state-required PIP (personal injury protection) coverage. If you have already have health coverage, you may be able to keep only a minimum level of PIP—but it’s important to consider state requirements and whether your health insurance company will allow this.

2. Have I taken advantage of all the discounts offered?

The market for personal lines insurance is highly competitive. This has kept costs down: Homeowners/tenants insurance costs increased by about 17 percent between 1999 and 2008, compared with a 57 percent increase in the cost of repairing household items and a 50 percent increase in legal services, according to the U.S. Bureau of Labor Statistics.

Auto insurance carriers offer special programs that help consumers keep a lid on costs. Ask your Trusted Choice® agent about discounts for having a homeowners and auto policy with the same carrier; for maintaining a claim-free record for consecutive years; for low-mileage drivers; and for young drivers who keep good grades.

For older vehicles, consider dropping collision coverage. Since auto insurance claims occur about once every 11 to 12 years, it may not be cost-effective to insure a vehicle that is worth less than 10 times the collision insurance premium. (In this case, the claim reimbursement likely would not exceed the premium minus the deductible amount.)  Ask your Trusted Choice® agent what the cash value of your older vehicle is, to help you decide.

One caution: The slump in housing prices has tempted some consumers to cut the amount of insurance on their homes, but that’s a trap. Homeowners insurance should be based on replacement cost, not market value, and many homeowners are already underinsured. Replacement costs continue to grow steadily, year after year, regardless of market values. Your Trusted Choice®  agent can help you determine the proper amount of homeowners insurance for you.

Finally, your Trusted Choice® agent also can help by shopping your insurance needs to a number of insurance carriers. If you haven’t done so in three years, now is a good time to ask if your policies can be reviewed to make sure your pricing is the most competitive available.

IS YOUR HEALTH INSURANCE RIGHT FOR YOU?

Your health is way too important to leave to chance. That’s why it’s critical that you have health insurance and that it is the right fit for you and your family. Unfortunately, millions of Americans do not know if their health insurance plan will cover their needs—or how to secure better coverage.

A good health insurance plan—one that covers every potential need—goes a long way toward providing peace of mind and helping avoid a financial burden that otherwise would saddle you and your family with payment of major medical expenses. Ideally, you should have a more comprehensive plan that provides coverage for hospital, surgical or routine medical expenses. But, at minimum, your health insurance policy should cover major medical expenses resulting from catastrophic illness or injury.

Many Americans secure health insurance through their employer; others are not so lucky. But even if you have a primary policy, be aware that group benefit plans do not always provide all the coverage for your needs. You may want supplemental insurance or a health savings account (HSA) to help fill the gaps.

For those purchasing their own primary or secondary health insurance policy, the options can seem confusing and expensive. So, how do you know if your health plan is a good fit for you? Here are some tips:

1.    Evaluate your family’s needs. Consider your family’s lifestyle and medical history, and try to anticipate life-stage health events, such as braces for your pre-teen and glasses for your self. Wife turning 40? That means mammograms every year.
2.    Prioritize those needs. For example, vision care may be a good benefit for your family, but not as essential as a prescription-drug plan. List your must-haves as well as your nice-to-haves.
3.    Review plan options. For each plan you are considering, ask about key coverage provisions: Does the policy cover major medical expenses only? If your family needs preventive, dental and vision care, does the plan provide them? Does it include a prescription drug plan? Do any of these must-haves need to be purchased separately? Are your current doctors in the plan? Does a family member have a pre-existing condition and will the plan cover it?
4.    Determine your costs. Premiums are not the only costs you should consider when looking at a health insurance plan. Take into account the expenses you may have to assume beyond paying the premium, such as deductibles, coinsurance and co-payments. Are there added costs for using an out-of-plan doctor or hospital? Consider increasing your deductible for a lower monthly premium.
5.    Consider an HSA or FSA. An HSA provides two benefits: a tax write-off and a health coverage benefit. The health benefit provides coverage when you are sick or injured and the savings mechanism allows you to accumulate funds that you can use to pay for care for illnesses or injuries not covered by your insurance. An added benefit of an HSA is that both the cost of the health plan and your contributions are tax-deductible. Similarly, a Flexible Spending Account (FSA) allows you to set aside pre-tax dollars to cover medical expenses, which can help lower your taxes.
6.    Know the differences of PPOs & HMOs. Individuals in a health maintenance organization (HMO) must choose a primary-care physician from a provider network. This physician is responsible for routine medical care and must refer you to specialists. HMOs typically provide no coverage for services from physicians outside the network. Meanwhile, individuals in preferred provider organizations (PPO) do not choose a primary care doctor and do not need referrals. They can obtain coverage from physicians outside the network but the PPO likely will reimburse less for the services. PPOs require deductibles and co-payments; HMOs don’t have deductibles but participants must pay co-payments. Again, be sure your family’s doctors are in the plan you select.
7.    Get coverage today. Health insurance, much like life insurance, is usually less expensive for younger people. So, get your coverage now to secure a lower premium and be sure to maintain your coverage.
8.    Use it. Use your insurance for preventive care and wellness to decrease your risk of needing more serious medical treatment. Schedule routine doctor visits and get the regular tests that physicians advise for your age and condition. Take advantage of the discounts offered by some plans for gyms and weight-loss programs. Seek help for smoking or alcohol abuse.
9.    Don’t let it lapse. If you lose or leave your job, you may be eligible to take advantage of a COBRA plan. Even though you’ll be footing the whole bill for your health insurance, you’ll be getting the employer’s group rate and retaining coverage for 18 months. If you go without insurance for more than 60 days, it can be trickier and more expensive to purchase health insurance down the road.
10.    Stay current. Coverage can be affected by life’s changes—if you get married or divorced, for example. And keep in mind that your children will not be covered by your plan indefinitely; generally dependent children lose coverage at 19 (or 22 if a full-time student).

With so many options and pitfalls to consider, talk with your Trusted Choice® agent to ensure you are securing the most appropriate coverage for you and your family.

LIFE INSURANCE: DO YOU NEED IT?

The most frequently asked question about life insurance is: Do I need it? The answer depends greatly on your situation. So, let’s determine if you need it. Review these statements and check all that apply:

□    I am married.
□    I have children.
□    Our family recently welcomed a new baby.
□    I am single, but I have dependents (a child or an elderly relative) who I support.
□    I am the sole breadwinner in my household.
□    I recently changed jobs.
□    My income has changed.
□    I recently bought a house.
□    I will pay for my children’s college education.
□    I own a business.
□    I am in debt.
□    My family has a history of illness, such as diabetes or heart disease.
□    I have trouble saving/investing money.

If you checked any of these statements, you need life insurance to protect the loved ones who rely on you for their financial support.

Imagine if you died unexpectedly. What would happen to your spouse, your children and other dependents? Would their standard of living or care slip significantly? Who would pay your children’s college tuition? Who would pay your mortgage and other debts? Would your business survive?

With life insurance, these concerns go away. If for no other reason, get life insurance for those most important to you—your family.

Life insurance tips

Now that you’ve determined that you need life protection, here are 10 suggestions to help you look for the best life policy for your family’s needs:

1.    Get the right amount. Remember that the amount of life insurance you need is directly related to the dependency of your family. An eight-year-old child is more dependent than a 20-year-old already is in college. Plus, knowing how much coverage you need prevents you from paying for unnecessary insurance.
2.    Start young. Get your life insurance while you’re young. Generally, premiums are cheaper for younger people because they are healthier than the rest of the population. Also, buying young will enable a cash-value policy to grow in value.
3.    Live healthy. Don’t smoke. Tobacco users pay more than twice the premium as non-smokers. Also, don’t cheat because benefits can be denied if someone who claims to be a non-smoker dies of a smoking-related illness. Also, you can improve your insurability and get a better rate by routinely visiting your doctor and improving medical conditions, like high blood pressure.
4.    Know what life policy you need. Learn the difference between term life and whole life policies, as well as that of a cash-value policy versus an annuity. There are products that serve several purposes and those that serve a single purpose. Know what your needs are first. Then you’ll know which coverage you should purchase.
5.    Dual incomes? If you and your spouse are breadwinners, get life insurance for both of you. That way, if either of you passes away, the family’s standard of living will not suffer.
6.    Prepay the premium. Ask the insurance company if you can pay your premium in advance, instead of monthly. This approach will save money on administrative or handling fees. Not all companies do this, but it never hurts to check.
7.    Want to save money, too? Some life insurance products—known as “cash-value policies”—are both a savings tool and a death benefit. These polices are ideal if you cannot save money. The cash value accumulates and can be borrowed or used for other purposes.
8.    Buy ‘bulk.’ Some insurance companies charge less for buying more. For example, it may be cheaper to purchase a $250,000 policy rather than the $230,000 you need.
9.    Don’t rely on employer-provided coverage. Many group plans limit the amount of coverage offered, which may not be enough for your needs. Additionally, you likely cannot take the life insurance with you if leave your job.
10.    Keep your coverage current. Major life events will impact the amount of coverage you need. Many events—such as having a child, getting married or buying a big house—will increase the amount of coverage you need. Others—such as children leaving the roost—may decrease the coverage you need.

Losing you would be painful enough for your family. The right life insurance can at least alleviate concerns about the financial implications of your death.

Ryan Ketcheson is a local Trusted Choice® agent that represents multiple insurance companies, so he offers you a variety of personal and business coverage choices and can customize an insurance plan to meet your specialized needs.

DOES VOLUNTEERING YOUR TIME MEAN VOLUNTEERING YOUR INSURANCE?

Millions of Americans donate time—their most valuable asset—to serve as a volunteer board member on non-profits, booster clubs, churches, PTAs and civic organizations, just to name a few. The decisions these folks make can have a dramatic impact on their respective organization—and not always for the better. If a volunteer endeavor goes bad, would a volunteer board member have coverage against a lawsuit under his or her homeowner’s policy?

Homeowners’ Insurance
The last thing volunteers want to consider is what would happen if their favored organization file suit against them as a result of their efforts. But it happens, and not infrequently. This does happen, especially when volunteers make decisions that directly influence the finances of an organization. Often, the only insurance these volunteers have to back their efforts is a homeowner’s policy. Unfortunately, this policy may be of little assistance.

The reason homeowners’ policies do not usually cover liability stemming from actions as a volunteer is the nature of the claim. The policy is designed to cover claims of “bodily injury,” such as someone slipping on cracked pavement in your driveway; and/or “property damage,” such as accidentally setting your neighbor’s house ablaze when burning some brush on a windy day.

Claims against board members do not usually involve bodily injury or property damage. Rather, they involve bad decision making that results in financial loss to the organization, such as the decision to invest in an IT system that turns out to be a debacle, costing the organization tremendous time and money.

There is another problem. Homeowners policies do not cover “professional services.” This is important to note, because board members are often asked to serve in a capacity consistent with their profession. For example, a church member who is a CPA may be asked to serve on the church’s board as finance chairman. Even though he is not paid for his services, the “professional services” exclusion under his homeowner’s policy would still apply.

In addition to the above, homeowners policies do not cover claims of personal injury unless this coverage is specifically added. Personal injury insurance is added to the homeowner’s policy to cover claims such as libel, slander, wrongful eviction, and false advertising.

What to Do
Events causing claims are unpredictable. While the reasons shown above prove it’s unlikely, not all claims against volunteer board members are excluded by a homeowners policy. Decisions to purchase personal injury coverage and a personal umbrella policy will increase your ability to find coverage for a suit against you. 

The best method for insuring the actions of board members is for the organization to purchase a directors and officers (D&O) liability policy. These policies are relatively inexpensive for most non-profits. Before volunteering, request information on the organization’s D&O policy. The absence of this insurance leaves you at risk of having no personal insurance to defend a suit brought against you by the organization and should influence your decision to serve.   
Stonebraker McQuary Insurance is a local Trusted Choice® agency that represents multiple insurance companies, so it offers you a variety of personal and business coverage choices and can customize an insurance plan to meet your specialized needs. You can visit Stonebraker McQuary Insurance online at www.stonebrakermcquary.com or call us at (509) 758-5529.  Ask for Ryan Ketcheson.

SMALL BUSINESSES: DON'T LET BUSINESS RISK SHARE YOUR HOME!

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The diversification of the U.S. economy over the past generation has meant that millions of Americans have started their own businesses. Americans still chase the dream of being their own boss by starting their own business—and the trend may pick up during the economic slump of 2009 because of hiring slowdowns and spikes in corporate layoffs.

Small businesses are the biggest driver of job growth, generating 60 to 80 percent of net new jobs annually over the last decade, according to the U.S. Department of Commerce. Small firms employ half of U.S. workers.

And the sole proprietor is alive and well: In 2005, there were six million firms with employees but a whopping 20.4 million firms who had no employees other than the owner, according to the Small Business Administration.

Of all small businesses, 52 percent are home-based. That means millions of Americans are earning their business income where they live. But business owner beware: Don’t expect homeowners insurance to cover business risks.

Business insurance offers protection from liability and property risks. Often these coverages are combined into a package policy called a BOP or business owner’s policy. Millions of small and mid-sized business owners purchase or renew their BOP every year.

Typically, a BOP includes the following coverages:
Property insurance for buildings and contents of the business. Home-based business might not need coverage for their property, since it’s already insured against risks of fire, lightning and windstorm. But if there are additional risks to the structure because of the presence of business operations, those won’t necessarily be covered by homeowners insurance. Your Trusted Choice® insurance agent can help determine if a special endorsement or a separate policy are most appropriate.

Home-based businesses might not have adequate coverage through homeowners insurance because homeowners policies often have “sublimits” restricting coverage for business property. For instance, the homeowners policy may cover business property, but typically only up to $2,500 while it is “on premises” and up to $500 while the property is “off premises.”

One example of inadequate coverage was a home-based retail cosmetics/personal care business that kept $20,000 of inventory in a garage that caught fire. The inventory was covered only up to the sublimits of the homeowners policy. Another instance: Coverage would be limited to the “off premises” limit of $500 if a laptop computer valued at $1,500 that is stolen while the business owner has it away from home.

Property insurance for buildings and contents of the business. Home-based businesses might not need coverage for their property, since it’s already insured against risks of fire, lightning and windstorm.

If there are additional structures on a residential property where the homeowner operates a business, those won’t necessarily be covered by homeowners insurance. For example, a detached garage that serves as a small-engine repair shop would not be covered by homeowners insurance; that business owner would need a policy endorsement to gain coverage.

Business interruption insurance. This protects against loss of income resulting from a fire or other covered event that disrupts the business. This coverage can also include the extra costs a business shoulders while it works from a temporary location. A fire in a home can be double trouble for a home-based business.

Liability insurance. This protects the small business for legal responsibility for the damage it causes to other people or entities. Liability insurance is usually priced according to the risk of the industry in which the business operates. A business that manufactures toys, for example, faces different risks than a consulting firm. Liability insurance shields a business and its employees if they cause bodily injury or property damage.

Not included in a BOP are professional liability coverage, automobile insurance, workers compensation, medical insurance and disability insurance. All can be covered with separate policies.

Check with your Trusted Choice®  insurance agent about what type of insurance protection a small business—especially a home-based business—warrants.

INSURANCE: THREE QUESTIONS CONSUMERS WANT ANSWERED

Insurance comes in a wide array of choices for a variety of consumer and business needs. Even the best-educated consumer who spends time researching insurance issues will come across a topic he or she doesn’t understand.

Let’s take a look at what consumers say when asked: “What’s one thing you don’t understand about insurance?” Here are three common questions that Trusted Choice® insurance agents and brokers hear:

Q: Why do I need insurance?

Insurance is for the uncertainties of life. Accidents and catastrophes happen. What can’t be predicted is when they will occur, and whom they will affect. Most people understand they’ll get sick at some point in their lives, but they can’t predict the severity and extent of the illness nor the cost of the treatment.

Catastrophes strike: In 2005, there were 24 weather-related or other disasters causing a total of $61 billion of insured losses. Hurricane Katrina alone caused $41 billion in damage from 1.75 million insurance claims.

Even the safest drivers face the risk of an accident, and even the safest homes can catch fire. In 2006, about 5 percent of insured homes had a claim, according to the Insurance Services Office. About 94 percent of these homeowners insurance claims were for property damage, including theft.

Lawsuits are another uncertainty that businesses and homeowners face. They’re costly: In the 56-year period from 1950-2006, the costs of the tort lawsuit system in the U.S. increased an average of 9.2% each year, reported Tillinghast-Towers Perrin. While most lawsuits are settled before they reach the courtroom, Jury Verdict Research data show that the median plaintiff award in personal injury cases was $45,000 in 2005, compared with $32,000 in 2002. Insurance provides two benefits to those who are sued: It pays for the cost of defending the lawsuit and pays for any liability payments for which the insured is found responsible.

Q: How do you define what insurance is … or does?

Insurance is simply a vehicle for transferring risk from one party to another. You need insurance if you have financial risk (and everyone does) and you want to reduce that risk. To do so, you pay someone else (e.g., the insurance company) to assume much of the risk for you, in return for a payment known as a “premium.”

Because American consumers hold a tremendous amount of wealth in property—ranging from homes and cars to collections of baseball cards and Christmas ornaments—they have a basic need to protect themselves from losing that value.

Insurance is designed to “make people whole” after their property or assets are damaged or stolen, or if they are responsible for harm caused to another party. An insurance policy is a contract under which an insurance company agrees to pay a certain amount of money to the policyholder if certain events happen (and their property is damaged or they cause harm to someone else or someone else’s property).

Q: Is life insurance an investment or purely insurance?

A: Life insurance for centuries has been first and foremost insurance: it provides a death benefit to the family or business partners of an insured person.

Beginning about 30 years ago, the attractive returns in stock investments led insurance companies to bring investment elements into life insurance policies. For example, agents and companies offered consumers the choice of placing life insurance premiums into mutual funds, stocks, and bonds within the life insurance contract—known as “variable” life insurance. The term “variable” implies that the investment returns on these premiums vary with market performance.

With these types of life insurance policies, the insurance carrier takes the policyholder’s premium dollars and places them in the investment account(s) chosen by the policyholder. These types of life insurance policies are subject to state insurance regulation and federal and state securities regulations.

While investment-oriented life insurance has grown popular over the past generation, traditional life insurance (both permanent and term) continues to be purchased in large amounts. Americans purchased $3 trillion of new life insurance coverage in 2006, according to the American Council of Life Insurers.

If you’re not sure whether a life insurance policy includes investment elements, you can check the disclosure information on a life insurance application or policy, which must discuss whether securities are part of the life insurance contract.

What are your particular questions about insurance? Contact me today!

WHEN YOU CAN'T COME HOME: WHAT DOES "LOSS OF USE" COVERAGE ACTUALLY COVER?

Your homeowner’s insurance policy will pay to repair damage to your home caused by a fire, windstorm or other covered cause of loss. But when you and your family incur expenses for moving out while repairs are made, who picks up the tab?

An often-overlooked but essential function of your homeowner’s policy is “additional living expenses” (also called “loss of use” or “Part D”) coverage. Additional living expenses coverage will pay the necessary increase in living expenses required to maintain your family’s current standard of living while the house is being repaired. Examples of expenses typically covered include the cost of hotel, food bills in excess of normal grocery/restaurant bills, cooking supplies and the cost of moving property into storage.

The good news is that payment for these expenses usually does not stop if the policy expires. Rather, they will continue to pay until the limit is used up, the home is repaired to a habitable state, or you permanently relocate.

The bad news is that many homeowners erroneously believe that the policy covers 100 percent of additional living expenses until the home is habitable. Realistically, very few policies do this. In most cases, home insurance companies place a limit or cap on loss-of use payments. For example, many homeowner policies will only offer loss-of-use coverage as a percentage of the limit of insurance carried on the dwelling; 20 percent is common. Others may specify a flat dollar amount.

Usually, a covered loss must occur for any insurance dollars to be paid for additional living expenses. The one exception is if your home is not accessible due to civil authority or government mandate triggered by nearby damage. For example, in 2009, wildfires in California triggered mandatory evacuations that prevented tens of thousands of homeowners from going home. If homes in close proximity to yours are burning, there’s a chance the government will close roads and/or prevent you from entering your property even though it has not yet suffered a direct loss. In this situation, additional living expense payments are often limited to two weeks.

Homeowners who receive additional income by renting a portion of their home should also pay close attention to the Part D limit. This limit also applies to replacing lost rental income while the damaged house is being repaired.

Here’s the important question: How do you know if your policy’s Part D limit is sufficient? The trouble is that important factors are variable. For example, how do you know how long you will be out of your house? Building codes and permits cause rebuilding efforts to proceed slowly in many parts of the country. Calling a local building contractor to gain some idea is a good start but there is no exact prediction.

Further, how do you know what expenses you will incur? According to Hotels.com’s 2009 hotel price index, the average hotel room in the U.S. costs $115 per night! Add this and other expenses to a lengthy, unpredictable repair schedule and the possibility of eclipsing your Part D policy limit before your home is habitable could become a serious problem.

The last thing you want to hear is that your loss-of-use coverage has run out before you can go home. Fortunately, your Trusted Choice® insurance agent understands this exposure and can help you weigh your options, including those that may increase your loss-of-use coverage limit. For a thorough review of your homeowner’s policy, call your Trusted Choice® agent today.

source: TrustedChoice.com, November 2009