Homeowners Insurance Exclusions

Does your homeowner’s insurance policy include comprehensive perils? Do you know what that means? Nearly every insurance policy has exclusions (perils that the policy excludes against). The exclusions can include earthquakes, flooding, and sump pump failure.

The short video below will help you with your understanding of what your homeowners insurance policy may or may not cover.

As always consult with your agent if you have specific questions about your homeowners insurance

2014 Insurance Planning

Greeting the New Year is one of my favorite events. Beautiful-Happy-New-Year-2014-HD-Wallpapers-by-techblogstop-1It’s a time when I can reflect back at what has transpired over the past 12 months, and set goals and plans for what I hope to accomplish over the year. It’s a time when I can free myself of the past year’s failures and shortcomings, while I celebrate my accomplishments and prepare to be my best in the New Year.

Some people will resolve to lose weight or quit smoking in the New Year. I would imagine that a lot will sit down at the kitchen table with pen and paper in hand to do some financial goal planning. You’re planning to pay off that pesky credit card, or maybe you’re planning on putting in that swimming pool that you’ve always wanted.

Insurance AgentWith this in mind, let me suggest that the New Year is also an excellent time to review all of your insurance needs with your insurance agent. Insurance is not a “set it and forget it” financial product. It’s a financial product that needs to be continually maintained. As our lives change so do our insurance needs.

As you probably know, there are many changes imagesMAO8Q7F8taking place in insurance right now, and not just in health insurance, but also in home and auto. Premium rates are increasing and coverages are decreasing. You’ve probably noticed the increasing premiums, but did you know that your coverages may not be as good as they once were?

I thought that I was covered is not an insurance program. Make an annual insurance review part of your new year’s financial strategy. You will be glad that you did.

 

Has Your Deductible Changed Without Your Knowledge?

For the past several years homeowner’s insurance companies in Indiana have been losing money, primarily because of wind and hail claims. Storm patterns in recent years have pelted the Midwest with wind and hail related claims that reach into the $ billions. In fact many insurance companies are paying out 2 dollars in claims, for every dollar they receive in premium.Hail-damage-house-OK-6-2011-lg

This has been the primary reason the industry has seen such an increase in homeowners insurance premiums over the past few years. While this trend is not likely to end any time soon, some insurance companies are also changing the way they pay out claims.

Traditionally a homeowner’s policy has a dollar amount named as the deductible. That amount is subtracted from the amount of the claim. For example, if the policy has a $1,000 deductible and there is a $5,000 claim, the insurance company would pay out $4,000.

However there is a trend in the industry that has some companies changing their deductibles from a dollar amount to a percentage, especially if the claim has been caused by wind or hail.

Hand over your moneyI recently spoke to a married couple who had damage to their roof caused by the outbreak of tornadoes we experienced in the month of November. They called their insurance company to file a claim, and discovered that their deductible for a wind claim is 10% of their dwelling value. Their dwelling value is $360,000 which made their deductible $36,000. Needless to say they ended up having to pay for the repairs to their roof out of their own pocket.

Did you catch that? Their deductible was $36,000 for wind and hail damages!

Unfortunately many other companies are following suit. Some very large and well-known insurance companies are changing their wind and hail deductibles to a % and most of their clients are unaware of the change. Often times clients are only notified of this change within the mountain of paperwork they receive in the mail from the company at the policies renewal.

Let’s face it; most people do not have the time to sift through that much paperwork. They file it away and assume that the coverages have remained the same.

The example given above of a 10% deductible is the most extreme case that I have seen. More frequently I am seeing wind and hail damage deductibles changing from a dollar amount to 1% or 2% of the dwelling coverage. 1% or 2% of the dwelling is still a significant amount of money to pay out of pocket at the stressful time of a claim.take action

Protect yourself.

1. Review your documents. Take the time to review the documents when you receive information in the mail from your insurance company. If you do not understand the language or have questions, take the policy to your agent and have them explain the coverages.

annual review2. Insist on an annual review. Your agent should be sitting down with you on an annual basis to review your coverages and to answer your questions. There are too many changes taking place in the homeowner’s insurance arena right now to ignore the paperwork and hope for the best.

3. Educate yourself. Too often times I hear people say that they paid their premium so the assumed everything was OK. Don’t turn a blind eye to your insurance coverages. Insurance is expensive so you should do you best to make sure that you understand what you are paying for.

Replacement Value or Actual Cash Value

Do you have Replacement Value or Actual Cash Value? This is an important question that needs to asked when determining which insurance program is right for you.

ConfusionReplacement Value Insurance means that if your covered item is destroyed you will be paid the amount of money it takes to replace that item with a brand new item. There are a few caveats in each policy and you must subtract your deductible, but this is a good definition of Replacement Value.

Actual Cash Value Insurance (ACV) means that if your covered item is destroyed you will be paid the value of that item at the time of the occurrence. If your item is 10 years old the item will be depreciated accordingly and you will be paid the cash value of that item minus your deductible.

Here are two examples.

Your roof blows off of your house in a bad storm. You get an estimate of $15,000 to replace your roof.Limestone Tornado Damage

If you have Replacement Value Insurance with a $1,000 deductible the insurance company would pay the roofing contractor $14,000 and you would pay $1,000, the amount of your deductible.

If you have ACV with a $1,000 deductible the insurance company would then do some calculations to determine the value of your roof at the time of the occurrence. If your roof is 8 years old, they would depreciate the value of your roof by 8 years. They may determine that the cash value of your roof to be $11,000. The insurance company would then pay the roofing contractor $10,000 ($11,000 minus your deductible of $1,000), and you would pay the roofing contractor the remaining $5,000.

Here’s another example

Missing RoofIn that same scenario of the roof blowing off of your home, you have nearly all of your personal property damaged by rain water, hail damage, and wind.

If you have Replacement Value Insurance on your personal property the insurance company would calculate how much it would cost to replace the damaged personal property with new personal property of the same kind. If they determine that it is $100,000, you would be paid out that amount to replace your personal property. In this case the deductible was already paid through the roofing contractor.

If you have ACV on your personal propertyConcerned Woman the insurance company would then do some calculations to determine the cash value of your personal property at the time of the occurrence. You may only get $200 for your 10 year old couch, even though a new couch may cost $1,200. They may determine that your personal property had a cash value of $25,000 at the time of the occurrence. You would be paid out that amount to replace your personal property. Your deductible was already paid through the roofing contractor.

Summarizing these 2 example; if you had Replacement Value Insurance your insurance company would have paid out $114,000 (replacement of the roof and your personal property) and you would have had to pay out $1,000 (the amount of your deductible); and if you had ACV your insurance company would have paid out $35,000 (the ACV of the roof and your personal property minus your deductible) and you would have had to pay out $80,000 to replace your roof and personal property.

new roofReplacement Value Insurance cost about 10% more than ACV and there are some situation where ACV is called for. Some risks may not be eligible for Replacement Value Insurance because of the condition of the property, or the nature of the risk.

There are changes taking place in the insurance industry right now that you need to be aware of.  Some companies are changing the way that they pay out claims from what they may have done in the past. I am seeing deductibles increasing and policies that once had Replacement Value Insurance getting changed to ACV. Many HO3 polices have Replacement Value on the home but ACV on the personal property. Do you know what you have? logo3696786_mdIf you are unsure, contact your agent right away.

You can also contact Bragg Insurance Agency at 317-758-5828 for a free no obligation review of any of your insurance policies.

Be on the Alert for Deer

My favorite time of year is Harvest Season. I love the cooler weather, wonderful colors, fall parties, and watching the farmers in their fields. Fall is also deer season…not just deer hunting season, but also “watch out for that deer” season.White-tailed_deer

As the corn and beans grow during the summer deer can easily move from woods to woods without being detected and with very little human interaction, but when it’s time to cut beans or pick the corn that all changes. Grain farmer will confirm that they lose crops every year from deer who feed on the corn and beans.

When the harvest starts and combines go into the fields, deer sometimes freak out! They run, and sometimes they run right into a car.

To compound the issue bow hunting season starts (this year on October 1st) and then shot gun hunting season (this year on November LargerDrawnBow16th.)  Deer are constantly on the move, trying to avoid tractors, combines, and hunters.

Deer are also nocturnal and with our diminishing daylight hours they are much more active in the fall and winter months. Nearly 50% of all deer related accidents happen between the months of October and December.

According to the National Highway Traffic Safety Administration about 1 million car accidents each year are a caused by deer / vehicle collisions. These collisions kill about 200 people each year (not to mention a lot of deer). The accidents cause about 10,000 personal injuries and cost about $1 billion in property damage.

If you’re from Indiana, I don’t have to tell you that hitting a deer can cause a lot of damage and even death.   In fact, I will bet you have either hit a deer yourself, or personally know someone who has.

What can you do to protect yourself?deer-and-car_100324859_m

1. Be on Alert! Especially at dawn and dusk, this is when deer are on the move. Also be aware of your surroundings. Are you driving in a rural area where deer are more likely to be seen? Are there farmers in the fields?

2. Watch your speed. If you are in an area and/or at a time where deer are likely to be seen, take your foot off the accelerator and slow down.

3. Use your high beams. Look for deer in the headlights.

4. If you see one deer there are likely to be more and take precautions.

5. Don’t swerve. This may cause you to lose control and hit another vehicle or lose control of your vehicle.

6. Wear your seat belt! Many deaths and injuries are a result of being thrown through the windshield. Seat belts save lives.

The Umbrella Policy

What if the unthinkable happened to you?  You were the cause of a major accident that caused death or serious injury.  Would your insurance liability coverage be enough to cover the injured parties expenses, and protect your from financial ruin?Auto%20Accident%20C

For the vast majority of people the answer is “No”, but the umbrella policy can help you change that.

The umbrella policy starts at $1,000,000 in liability coverage and it covers your excess liability over your auto and homeowners insurance limits.

This means that if you auto insurance liability limit is $250,000 per person; with the umbrella policy in place you will then have $1.25 Million in liability coverage.  If your homeowner’s liability limit is $500,000; with the umbrella policy in place you will then have $1.5 Million in liability coverage.

Do you really need that much coverage?

If you are the cause of a serious accident you will suddenly be thrust into a “perfect storm” of financial ruin.  The combination of high medical expenses, attorney’s fees, and a “sue happy” society could cost you’re your life’s savings, future earnings, and equity that you have built in your home.

How much does it cost? 

Fortunately this type of coverage it is very affordable.  It varies from person to person, but I typically see a premium range of $200 to $300 per year.  $25 per month is not a lot of money to protect everything that you’ve worked for your whole life, especially in light of how much we spend for gas, cable TV, and dining out.

Yellow HouseWho needs an Umbrella Policy?

As an agent it is vitally important that I get to know my clients as best as possible.  This helps to recognize different risks associated with their occupation, hobbies, and life style.

I recommend this coverage to all of my clients, but I strongly recommend this coverage to people who have occupations that make them more susceptible to law suits, such as people who work with children.  It is my opinion that every teacher, Sunday school teacher, bus driver, day care worker, and little league coach have the umbrella policy as part of their insurance portfolio.Brian Bragg compressed

I also strongly recommend this coverage to people that have money that they want to protect.  Equity in homes, savings accounts, retirement accounts, future earnings, and other assets are all at risk when there is a serious accident.

For more information on the umbrella policy or to review your coverages, contact Bragg Insurance Agency.