Insurance Blog

Courtesy of iii.org

For many people, their home is their greatest asset, so it is crucial to avoid being underinsured. To properly insure your home, it is important to ask your insurance professional four key questions.

1. Do I have enough insurance to rebuild my home?

Your policy needs to cover the cost of rebuilding your home at current construction costs. Unfortunately, some homeowners simply purchase enough insurance protection to satisfy their mortgage lender. Others confuse the real estate value of their home with what it would cost to rebuild it. Quite simply, you should have enough insurance to rebuild your home in the event that it is completely destroyed. Be sure to consider the following:

• Replacement cost - Most policies cover replacement cost for damage to the structure. A replacement cost policy pays for the repair or replacement of damaged property with materials of similar kind and quality.
• Extended replacement cost - This type of policy provides additional insurance coverage of 20 percent or more over the limits in your policy, which can be critical if there is a widespread disaster that pushes up the cost of building materials and labor.
• Inflation guard - This coverage automatically adjusts the rebuilding costs of your home to reflect changes in construction costs. Find out if your policy includes this coverage or if you have to purchase it separately.
• Ordinance or law coverage - If your home is badly damaged, you may be required to rebuild it to meet new (and often stricter) building codes. Ordinance or law coverage pays a specific amount toward these costs.
• Water back-up - This coverage insures your property for damage from sewer or drain back-up. Most insurers offer it as an add-on to a standard policy.
• Flood insurance - Standard home insurance policies provide coverage for disasters such as fire, lightning and hurricanes. They do not include coverage for flood (including flooding from a hurricane). Flood insurance is available through the federal government’s National Flood Insurance Program (www.floodsmart.gov), but can be purchased from the same agent or company representative who provides you with your home or renters insurance. Make sure to purchase flood insurance for the structure of your house, as well as for the contents. Excess Flood Protection, which provides higher limits of coverage than the NFIP in the event of catastrophic loss by flooding, is available from some insurers. Keep in mind that there is a 30-day waiting period before the insurance is valid.

2. Do I have enough insurance to replace all of my possessions?

Most homeowners insurance policies provide coverage for your personal possessions for approximately 50 percent to 70 percent of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of coverage on the structure of your home, you would be covered for $50,000 to $70,000 worth of the contents of your home, depending on the policy.

The best way to determine if this is enough coverage is to conduct a home inventory, which details everything you own and the estimated cost to replace these items if they are stolen or destroyed by a disaster. Keep your home inventory in a safe place if you have physical copies; or store it in the Cloud if you are using a home inventory app.

You can insure your possessions in two ways: by their actual cash value or their replacement cost. Make sure you review with your insurance pofessional which type of coverage is best for your particular situation.

• Actual cash value policy This coverage pays the cost of replacing your belongings minus depreciation.
• Replacement cost policy This coverage reimburses you for the full current cost of replacing your belongings.

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To illustrate the difference between the two types of policies, suppose, for example, a fire destroys a 10-year-old television set in your living room. If you have a replacement cost policy for the contents of your home, the insurance company will pay to replace the TV with a comparable new one. If you have an actual cash value policy, it will pay only a small percentage of the cost of a new TV set because the old TV has been used for 10 years and is now worth a lot less than its original cost. Some replacement cost policies specify that the new item be purchased by the insurance company as they may be able to purchase at a bulk or special rate. The price of replacement cost coverage is about 10 percent more than that of actual cash value.

3. Do I have enough coverage for additional living expenses?

Coverage for additional living expenses pays the extra costs of temporarily living away from your home if you can't live in it due to an insured disaster such as a hurricane. It covers hotel bills, restaurant meals, transportation and other living expenses incurred while your home is inaccessible or being rebuilt. It is important to note that it covers only those expenses that are over and above your regular living expenses, so it would not cover your mortgage, or regular trips to the grocery store. If you rent out part of your house, this coverage also reimburses you for the rent that you would have collected from your tenant if your home had not been destroyed.

Coverage for additional living expenses differs from company to company. Many policies provide coverage for about 20 percent of the insurance on your house. Some companies will sell you a policy that provides you with an unlimited amount of loss of use coverage, for a limited amount of time.

Make sure you know exactly how much coverage you have for additional living expenses, and whether there is a time limit. If the standard coverage is not adequate, it can generally be increased for an additional premium.

4. Do I have enough insurance to protect my assets?

Although not a key element in disaster planning, it is also important to have adequate liability protection. This covers you against lawsuits for bodily injury or property damage that you or your family members may cause to other people. It also pays for damage caused by pets. Liability insurance pays for both the cost of defending you in court and for any damages a court rules you must pay—up to the limits of your policy. Most homeowners insurance policies provide a minimum of $100,000 worth of liability insurance, but higher amounts are available.

It is important to purchase enough liability insurance to protect your assets. If the standard liability coverage in your homeowners policy is not sufficient, you may need an excess liability, or umbrella, policy, which provides additional coverage over and above what is covered in your home (and auto) insurance policy.

Courtesy of iii.org

Health officials in the U.S. have advised businesses, schools and communities to prepare for a possible outbreak of the COVID-19 coronavirus. On Tuesday, February 25, the Centers for Disease Control and Prevention (CDC) said a wider spread of the virus in the U.S. can be expected, but the agency is uncertain of the severity of the threat.

The disruption to everyday life could be severe.

“It’s not so much a question of if this will happen anymore but rather more a question of exactly when this will happen and how many people in this country will have severe illness,” said Dr. Nancy Messonnier, the head of the National Center for Immunization and Respiratory Diseases at the CDC.

Being prepared for a pandemic should be a part of every household’s emergency plan. The Federal Emergency Management Agency’s Ready.gov website offers the following tips:

Before a Pandemic

• Store a two-week supply of water and food.
• Periodically check your regular prescription drugs to ensure a continuous supply in your home.
• Have any nonprescription drugs and other health supplies on hand, including pain relievers, stomach remedies, cough and cold medicines, fluids with electrolytes, and vitamins.
• Get copies and maintain electronic versions of health records from doctors, hospitals, pharmacies and other sources and store them, for personal reference. Get help accessing electronic health records.
• Talk with family members and loved ones about how they would be cared for if they got sick, or what will be needed to care for them in your home.

During a Pandemic

• Limit spread of germs and prevent infection.
• Avoid close contact with people who are sick.
• When you are sick, keep your distance from others to protect them from getting sick too.
• Cover your mouth and nose with a tissue when coughing or sneezing.
• Washing your hands often will help protect you from germs.
• Avoid touching your eyes, nose or mouth.
• Practice other good health habits. Get plenty of sleep, be physically active, manage your stress, drink plenty of fluids, and eat nutritious food.

Courtesy of iii.org

Road rage incidents are not only dangerous, they are exempted from coverage by many auto insurance policies. Understand your risks and take precautionary measures to avoid being a victim—or a cause—of aggressive driving accidents.

Crowded highways and traffic backups at times cause drivers to lose control and become extremely aggressive. Road rage is a real problem that can lead to serious accidents or even incidents of violence on the road.

It's important to realize that road rage is listed as an exemption in many auto insurance policies. This is because any damage or liability stemming from aggressive driving isn't considered an accident but rather as having been caused by risky behavior.

Rather than risk paying the consequences of road rage—one of which may be not having your auto insurance claim paid—it's best to avoid a dangerous and costly aggressive driving incident in the first place.

If you encounter an aggressive driver on the road…

• Stay as far away as possible. Slow down or change lanes if need be, let the driver pass you and give yourself room at intersections to drive away.

• Record a description of the car and note the license plate number if possible so that you can report him or her to the police for the sake of everyone's safety.

• Do not engage with or challenge the offender in any way. Ignore the driver's rudeness and don't give into the temptation to react in kind or you might escalate the risky behavior.

• Put your safety first. If an aggressive driver starts to follow you, keep your doors locked, and head to the nearest police station. Never stop and confront an aggressive driver.

If you have a short fuse yourself stay cool and…

• Leave plenty of time to get where you need to go. When you're in a hurry, your patience is short and you are much more likely to become aggravated.

• Remember other drivers are not annoying you on purpose. People make mistakes or they might be driving more slowly for a reason—they might be lost, or their sight might be impaired by sun glare.

• Don't use hand—or single finger—gestures other than a wave to someone who lets you into your lane.

• Don't tailgate slow drivers. Hanging on another car's back bumper is dangerous. If the car in front of you has to stop short and you rear-end it, the accident would be considered your fault.

• Don't honk your horn insistently. Leaning on your horn is a bad practice. While it might make you feel better to express your frustration in a traffic jam, it won't make anyone go any faster, it's annoying to other drivers and passengers and it increases everyone’s stress level, which may lead to more aggressive behavior.

• Never stop to confront another driver. It could lead to a dangerous situation for all concerned.