8 Things to Know About Purchasing Home Insurance
The Need for Home Insurance
Homeowners need to purchase home insurance to protect their homes and personal property from actions such as a fire in the home, having the roof blow off during a windstorm, loss of possessions due to a burglary, or even having a neighbor could trip and fall on your front step. Individuals who rent need insurance to protect their furniture and other personal property. Everyone should have protection or insurance against liability for accidents that injure other people or damage their property.
Know the Basic Coverages Available
Whether you own or rent, there are different packages of home insurance that are offered to protect your home and possessions. Each package protects against a specified number of events that cause damage to property. Standard types of insurance coverages on your home or apartment offer protection against the financial loss you might suffer to your home or belongings if any of the following events occur:
Fire, windstorm, hail, explosion (except for steam boilers), riot, civil commotion, aircraft, vehicles, smoke, vandalism and malicious mischief;
Theft of your personal property;
Someone gets injured on your property due to your negligence or that of a member of your family; or somebody else’s property is damaged as a result of your negligence.
In addition to this basic coverage, each insurance policy usually contains four additional types of coverage: property damage, additional living expenses, personal liability and medical payments.
Decide How Much Coverage You Need
The better the homeowners coverage, the less someone will have to pay out of their own pocket if a loss occurs. The first step in determining how much insurance someone will need is to make an analysis of the value of the home (excluding the value of the land) and personal property within it. In some cases, the mortgage lender for the property decides the minimum amount of coverage the owner must have need and may require the homeowner to buy a home insurance policy that covers at least the amount of the mortgage. It is important to note that the amount of coverage for the house, contents and personal property will affect the price or cost of the insurance.
Deciding on Replacement Cost or Actual Cash Value
Homeowners insurance policies will offer the option to choose to insure the home and belongings for either the replacement cost or actual cash value. For the maximum insurance protection, insurance should be secured on a replacement cost basis rather than on an actual cash value. Replacement cost is the amount it would take to replace or rebuild a home or repair damages with materials of similar kind and quality, without deducting for depreciation. Actual cash is the cost to replace damaged property with new property of a like kind and quality, less depreciation.
Compare Deductibles
The insurance deductible is the amount the insurance policy holder has to pay out of pocket on each claim and applies only to coverage on the house and personal property. When choosing a homeowners policy the policy holder should make sure they understand the deductible and that they are comfortable with the amount in the event a claim arises. An insurance policy with a $100.00 deductible will cost more than one with a $250.00 deductible. Higher deductibles on then insurance policy may be available at reduced prices.
Shop Around Before Making the Insurance Purchase
Shop around to get the best price and service. Comparison shopping makes sense and saves dollars. There are a number of unbiased sources available to find out what different insurers charge for identical products and services, including your state insurance department, consumer publications and your public library. By doing a little homework and research, choosing a homeowners insurance policy can be done with confidence that the right insurance is obtained at the best possible price.
Read the Insurance Policy Carefully
Regardless of where the homeowners insurance is purchased or the type of insurance purchased it is important to review the conditions portions of the policy. When you purchase home insurance, you will receive a policy. You should be aware that a home insurance policy is a legal contract. It is written so that your rights and responsibilities as well as those of the insurance company are clearly stated. You should read that policy and make certain you understand its contents. After accepting the terms, keep the insurance policy in a safe place and know the name of the insurance company.
Review Home Insurance Needs Every Year
Check with the insurance agent at least once a year to make sure your policy provides adequate coverage and use this opportunity to compare insurance rates for comparable policy. In addition, review changes that may have been made to your home and contents that may impact the amount or type of insurance needed. An addition of a room, new insulation or remodeling may add value to the home and therefore may increase replacement cost.
Umbrella Insurance Policy
Common liability coverage limits of $300,000 on an auto policy and $500,000 for a homeowner’s insurance policy are quite standard. Unfortunately, it is not uncommon for losses that are covered by these types of insurance policies to exceed these figures.
If there is a claim or judgment, which can happen when the claim had gone through court for determination, which is above and beyond the amount of standard insurance coverage, the insured could be personally responsible for the difference. The insured’s auto and homeowners policies will normally cover the loss but only up to the amount of the designated coverage. Any amount of loss over that is generally going to be the responsibility of the insured.
An umbrella insurance policy is designed to give added liability protection above and beyond the limits provided by homeowners policies, auto policies, and if applicable a watercraft personal insurance policy as well. An umbrella policy takes effect in the event that the limits of the primary insurance policies are exhausted.
Umbrella liability insurance derived that name since it operates like an umbrella, providing additional coverage top of the existing auto and homeowners liability policies. The added layer of protection provided by an umbrella insurance policy protects against lawsuits resulting from damage to someone else’s property or injuries as the result of an accident. An umbrella policy also protects against false claims and intentional acts such as libel, slander and vandalism by minors, and covers false arrest, wrongful entry, invasion of privacy as well as provides coverage for other incidents like liability for rental properties or being sued for slander or libel.
An umbrella insurance policy will not protect against some claims such as: damage to property owned, used, or maintained by the insured, the intentional damage caused by the insured or family members, general damages due to business or professional activities, liability that is accepted by the insured under the terms of a contract and other possible exclusions.
Umbrella insurance is designed to protect an individual or family’s assets for now and in the future. These policies were often sold to business owners and those that had a high net worth but since asset value change rapidly for cars and homes, combined with the large losses that can occur from property damage and accidents, the safest course of action is to have an umbrella policy even if you are not a business owner or own a mansion and a yacht. You don’t have to be wealthy to need the insurance protection provided by an umbrella policy.
Just because you aren’t at high risk of being sued doesn’t mean you are at no risk. Umbrella liability insurance can help protect your assets from liability claims that could be larger than your existing coverage.
The appropriate amount of insurance coverage for an individual’s situation will depend on a variety of personal factors. It is always a wise decision to look at your homeowners insurance and automobile insurance policies to determine whether you have enough coverage to help protect your assets.
Umbrella liability is generally quite affordable and can be easily established with your existing insurance policies. To qualify for an umbrella policy, buyers normally have to already have in place or subsequently purchase the maximum liability coverage available on their auto and homeowners policies.
Always shop around when comparing insurance costs and coverage and get free quotes from your existing insurance company as well as competitors. Be sure to review any umbrella policy to see what actions are covered and at what cost.
Factors that Affect Your Car Insurance Rate
There are many factors that may affect the price you can expect to pay for auto insurance. An auto insurance quote is geared for a specific person, and their specific risk factors. If you have a high number of these risk factors, you will pay a higher price for your car insurance. Examples of these risk factors include age, gender, marriage status, miles driven per year, the purpose the vehicle is used for, and many other factors.
Understanding how insurance companies evaluate risk and the cost of car insurance is important to properly compare insurance costs and determine the appropriate vehicle coverage policy.
Coverage Type: The type of coverage is a factor that car insurance buyer will choose within the limits of the specific state requirements. It is important to understand how significant the type of coverage is not just for how it will impact a particular car insurance rate but rather how competing car insurance rate quotes may vary based on different levels of coverage.
The more coverage you have, the greater your insurance costs become. Liability, collision and comprehensive, fire, theft and vandalism are among the most popular options. By law, car owners are obliged to have liability coverage, but anything more is all up to you to decide whether it is necessary or not. It is important to wisely weigh your options often regardless of the insurance cost changes.
Age: If you are under age 25, you can expect to pay a higher rate for your auto insurance. Statistically, drivers under age 25 have the greatest chance of being in an accident, while drivers aged 50 to 65 have the safest driving records. Generally, when you reach age 25, the rate you are paying for auto insurance will decrease.
Gender: Women generally pay lower rates for auto insurance than men, as they are statistically safer drivers.
Marital Status: Those who are married have lower auto insurance rates than single individuals with the same driving records.
Geography: People living in rural areas, with lower traffic volume and therefore lower potential for accidents, often have lower car insurance premiums, as well. Those who live in congested areas with many accidents have a statistically greater risk of being in an accident, and will pay a higher premium for their car insurance. If you live in an area with a high risk of vehicle theft, your auto insurance premium may also be higher.
Moving Violations: Accidents or moving violations such as speeding tickets or reckless driving charges will mean a higher premium. This premium may stay in effect for up to five years after the violation. As your driving record improves, however, your premium will decrease. Accident claims also raise your insurance premiums, as well.
Vehicle Type: Cheaper family cars and sedans cost less money to insure than luxury cars, SUV’s, or expensive sports cars. Consider the value of your car when you are assessing how much you want to pay for your insurance.
Credit Rating: The better your credit rating, the better a risk you seem to your insurance company. Keep a close eye on your credit rating, as it can affect the rates you pay for auto insurance.
Occupation and driving distance to work: If you use your vehicle for your job or are driving a great distance daily, you may be viewed by your insurance company as a higher risk, leading to higher insurance premiums.
Other factors that can affect your insurance premiums are: education, the number of miles driven each year, the years of driving experience you have, and whether there are multiple cars or drivers in your family. Each of these factors can raise or lower your car insurance premiums.
When shopping for car insurance, be sure to take into account all the factors that can raise or lower your rates. Be prepared with documentation of your age, marital status, driving record, education, and occupation, so that you can get the best rate possible. Doing your research and comparing rates will allow you to get as many discounts as possible, and help you to get the best car insurance rate for your hard earned money. Always, shop around and compare car insurance quotes from different insurers.
Save on Home Insurance by Improving Security
Lower costs for homeowners insurance can often be found be maintaining a safe and secure home. Property crimes such as burglary make up a large portion of all crime in the United States. Homeowners can do simple things to improve their home security, and while doing so they can save money on home insurance. If you can prove to your insurance company that you have theft deterrents such as an alarm system and high quality locks, you may be able to receive a discount on your home insurance rates. Follow these simple guidelines to start saving money, while improving the safety of your home.
Follow Simple Security Procedures
Use common sense techniques to deter burglars and thieves. Don’t publicize the fact that you will be traveling or absent from your home for a period of time. Lock your doors and windows. Leave lights or televisions on a timer so that they turn on and off while you’re away. These simple techniques will help to keep thieves at bay.
Change Locks When You Move
When you move into a new home, there is no way to know who has keys to the existing locks. Change locks where possible. Reset all alarm codes. If the doors do not have deadbolts, consider installing them to keep out intruders.
Install an Alarm System
Installing an alarm is one of the easiest ways to lower your home insurance premium. Be sure to get clear instructions in writing for how to use your new system, to avoid costly false alarms.
Lock Your Doors and Windows
Locking your doors and windows is an important habit to get into. It only takes a moment for a thief or attacker to enter your home through an unlocked door or window. Lock up when you leave your home, and lock your doors and windows when home alone. This is one of the most basic security measures to use, but is often overlooked.
Leave a Key with a Neighbor
Avoid hiding a key outside your home, under a rock, or in a mailbox. These are all common places for thieves to look. Instead, get to know a local friend or neighbor, and entrust them with a key. This way, your key is easily accessible, but also in a safe place.
By following these simple security guidelines, you can ensure the safety of your home and your family. Basic security procedures will help keep you safe, and may save you money on home insurance. Check with your insurance agent or insurance provider for details. Shop and compare homeowner’s insurance policies annually to see whether you can achieve greater cost savings based on your homes safety features and claims record.
Alcohol Consumption and Life Insurance Rates
Alcohol plays a part in the lifestyle of many Americans on a regular basis. In fact, statistics show that 64% of American adults drink alcohol regularly. Unfortunately, and unbeknownst to many, alcohol consumption does have an effect on your life insurance rate.
Many factors influence insurance underwriting, including blood pressure, weight, cholesterol level, whether you smoke, and alcohol consumption. Most insurance providers have specific guidelines regarding these factors to determine the risk that they pose to your health.
Alcohol consumption, when described verbally, can be difficult to quantify. One person’s social drinking session might be another’s binge, making descriptions difficult. For this reason, insurance providers often ask a series of questions about your alcohol consumption, as well as evaluating your medical status and driving record. This provides them with a comprehensive view of the impact of alcohol on your day to day activities and health.
As you fill out your life insurance application, you’ll notice a series of questions regarding your existing medical conditions, such as liver disease and high blood pressure. You may also be asked questions about tobacco, drug, and alcohol abuse. Be sure that you answer these questions honestly, to avoid problems with your coverage at a later date. Providing false information can lead to cancellation or nonpayment of your insurance policy in the event of your death. Your insurance company may also request a medical examination to confirm the information you’ve provided.
You may also notice questions about your driving record. Insurance companies believe that there is a significant correlation between DUI’s and alcohol abuse, and will check your driving record for such occurrences.
If you’re a recovering alcoholic or a heavy drinker, however, don’t underestimate your ability to find affordable life insurance coverage. When paired with the right company, your life insurance may be more affordable than you’d think. Since 64% of Americans drink, life insurance companies would be giving up a large market if they denied coverage simply because of alcohol consumption.
Tips for Saving Money on Your Term Life Insurance
1. Purchase insurance while you’re young
Term life insurance is cheaper the younger and healthier you are. Take advantage of this and purchase your insurance policy early.
2. Buy an insurance policy of the appropriate length
Take into account your age when you’re purchasing term life insurance coverage. If you’re in your 30’s, a 20 year term length makes excellent sense. If you’re nearing retirement age, a shorter term policy might be a better idea.
3. Check for price breaks
Evaluate insurance rates for varying amounts of coverage. Compare these rates from insurance agency to agency and insurance policy to policy. You may be able to get more insurance for less money by raising the amount of your policy. Do your research and compare all insurance costs and savings options.
4. Purchase the right amount of life insurance coverage
Don’t let an insurance agent sell you more insurance coverage than you actually need. Most financial planners suggest that you purchase insurance coverage equal to 6-10 times your annual gross income.
5. Review your insurance policy regularly
Consult your insurance agent, compare insurance rates online and review your insurance policy every 2-3 years, to ensure that you still have adequate insurance coverage for your income and are getting the lowest possible rate.
Affordable Term Life Insurance for Smokers
Smokers often underestimate their ability to obtain affordable term life insurance coverage. Although life insurance is more expensive if you are a smoker, there are policies available at affordable rates. The key is to comparison shop between insurance agencies and insurance companies, as rates and criteria can vary dramatically from one company to another.
Who is Considered a Smoker?
Insurance companies have varying standards for classifying tobacco users. Some make a distinction between moderate and heavy smokers, charging moderate smokers less. Other insurance companies have classifications such as “standard” and “preferred” smokers, giving a preferred status discount to consumers who smoke, but are in good health otherwise. Check each company’s rates and ask about these types of discounts.
You may qualify for a non-smoking rate if you recently quit. Companies have varying lengths of time that you must be tobacco free in order to qualify for these insurance rates. Some even offer graduated incentive programs, decreasing your insurance rates more the longer you stay tobacco free.
Medical Exams and Insurance
Applying for term life insurance often requires a medical exam to verify the information you have provided, such as height, weight, and blood pressure. This exam may include a screening test to measure the amount of nicotine byproducts in your urine or saliva.
Finding Affordable Insurance Rates
With some research, nearly everyone can find term life insurance that they can afford. Due to the high percentage of smokers in America, there is a strong market for life insurance companies to insure smokers as well as non-smokers.
Use these tips to find affordable insurance rates on term life insurance:
1. Purchase insurance while you’re young
Term life insurance is cheaper the younger and healthier you are. Take advantage of this and purchase your insurance policy early.
2. Buy a policy of the appropriate length
Take into account your age when you’re purchasing term life insurance coverage. If you’re in your 30’s, a 20 year term length makes excellent sense. If you’re nearing retirement age, a shorter term insurance policy might be a better idea.
3. Check for price breaks
Evaluate insurance rates for varying amounts of coverage. Compare these rates from agency to agency and policy to policy. You may be able to get more insurance for less money by raising the amount of your policy. Do your research.
4. Purchase the right amount of coverage
Don’t let an insurance agent sell you more coverage than you actually need. Most financial planners suggest that you purchase coverage equal to 6-10 times your annual gross income.
5. Review your policy regularly
Consult your insurance agent and review your policy every 2-3 years, to ensure that you still have adequate insurance coverage for your income and are getting the lowest possible rate.
Is Identity Theft Insurance for You?
In today’s world, two of the biggest scares are having your identity stolen and having fraudulent claims against you. These scams are not only difficult and time-consuming to correct, they are emotionally costly, too. With so many people worried about the prospects of identity theft and the potential costs associated with this setback, more and more consumers are turning to marketing programs selling identity theft insurance.
Identity theft insurance plans are a new form of insurance that is designed to protect consumers from the costs associated with identity theft. The insurance varies in what it may cover including actual losses and the expenses involved in the time consuming process of cleaning up the problem once somebody has stolen your identity.
Just how prevalent are fraud and identity theft? And how do you protect yourself?
The Federal Trade Commission (FTC) maintains a database of fraud and identity theft complaints that have been filed with agencies and organizations. According to the FTC Consumer Sentinel database, annually between 2004 and 2006, more than 400,000 fraud complaints were filed and nearly 700,000 identity theft complaints were filed. Some people were victims more than once.
What kind of identity theft is reported?
In the year 2006, the FTC ranked high to low the following types of identity theft fraud:
Credit card fraud
Phone or utilities fraud
Bank fraud (checking, savings and electronic funds transfers)
Employment –related fraud
Government documents or benefits fraud
According to the FTC, the top five states in 2006 with the highest reported number of identity theft complaints were Arizona, Nevada, California, Texas, Florida and Colorado, respectively. The state with the lowest reported number was Vermont.
What does identity theft insurance cover?
For a nominal insurance premium you can secure up to $25,000 worth of coverage for identity theft. The coverage will reimburse you for expenses such as lost wages, phone bills, and notary and mailing costs. Sometimes attorney’s fees may be included, sometimes they are not.
If you do decide to consider the value of identity theft insurance, be sure to evaluate what it is you are buying and what services you will be receiving for your money. Be sure to shop and compare policies. Some insurance policies won’t cover legal fees or lost wages due to time away from work.
Equally important to the coverage and costs is the insurance deductible. Some identity theft insurance deductibles can range from $100 to as high as $1,000. And the average victim spends less than $1,500 to recover from ID Theft, according to the FTC.
Not all insurance companies offer identity theft insurance. Talk to your insurance agent or state insurance department for further information. Additionally, the FTC offers help to victims of identity theft. Call them at 877-ID-THEFT.
Identity theft insurance can be inexpensive for the premium costs but may be expensive relative to the odds of suffering a loss and more importantly the insurance coverage relative to the amount of the loss or claim.
Get specifics about what the insurance policy entails and specifically how it will function in the unfortunate event you need the coverage. Don’t buy the insurance just because of slick marketing or all the attention the media pays to this issue. And don’t the insurance because the price is right. Evaluate your needs and the policy benefits before you buy.
Uh-oh, Better Get Travel Insurance
Alan and Lynn planned a Southern Caribbean Cruise for their honeymoon. The trip was six months away, but their reservation required them to invest a significant down payment to hold it.
Just after making their deposit they watched a breaking news story about hurricanes in the Caribbean. Alan’s jaw dropped as he asked Lynn, “What do we do if our cruise gets canceled due to bad weather?”
Fortunately, there’s travel insurance. And if you’re planning an expensive vacation, you’ll be glad you’ve purchased some.
Four Basic Types of Travel Insurance Policies
1. Trip Cancellation Insurance
Trip Cancellation Insurance covers you if the company with whom you’ve booked the vacation goes out of business. It also covers you if you have to cancel the trip due to an insured reason, such as a death in the family. Also, if you, or your partner, suddenly become seriously ill or injured, most policies will reimburse a portion to you.
The cost of the policy is based on a percentage of the price of the vacation.
2. Baggage and Personal Effects Insurance
Suppose your bags were lost, stolen or damaged during the trip? Suppose your 2-carat diamond slipped off your finger while you were snorkeling? You can add baggage and personal effects insurance to cover losses such as these.
This is the section that also protects your electronic equipment or sporting gear. Policies vary in the amount of coverage, deductibles and costs.
3. Emergency Medical Assistance
If you had to stay in a foreign hospital or if you needed to be airlifted to a medical facility, you would be covered with this type of travel specialty insurance.
This policy would also cover you if you became seriously ill and had to be flown home. As some airlines require you to purchase additional seats if you would need to travel in a stretcher, this calamity could be costly.
However, first check with your health care insurance provider to find out what coverage they include for you when you travel.
4. Accidental Death
There are a variety of coverages noted under this type of policy, such as loss of eyes or limbs. These coverages are frequently offered by banks, credit card companies and through direct mail insurers.
Where to Purchase Travel Insurance
Credit card companies, travel agents or airlines offer this type of insurance. You could also purchase it directly from an insurance agent who carries this Travel Insurance and other specialty products.
Auto Insurance Premiums and Liabilities Basics
Auto insurance is a bill that is mandatory for most car buyers. Yet, this doesn’t take away from its expense. Fortunately, car buyers can decrease the amount of their auto insurance bill by leaving out or reducing certain types of premiums and/or liabilities. This article will provide more information on these premiums and liabilities.
1. Bodily Injury
Bodily Injury is a liability that covers both the driver and the passengers of the car. It is an expense that is mandatory in the majority of states, however, its cost can be determined by the car buyer. The liability is sold in increments of several hundred thousand. For example, if a car buyer purchases a $100,000/$300,000 liability, any person injured in an accident would receive a minimum of $100,000 or a maximum of $300,000, depending on the type of accident that occurred.
To save money on bodily injury, a person needs to determine the amount of assets need to be covered. An auto insurance calculator can be used to help make this determination. These can be found through a general search engine query.
2. Property Damage
Property Damage Liability will cover the costs that the other person involved in the accident has incurred. A person can save significantly in this area, since state minimums are usually just $5,000. However, there is another cost associated with lowering this premium… the possibility that not enough money will be available if a person wrecks a more expensive car. If a person can pay at least $50,000 on this liability, they will be better protected than if they only paid $5,000.
3. Personal Injury
Personal injury is a premium that is optional. It covers any medical or funeral costs that are incurred as a result of an accident. However, these costs can also be covered by health or life insurance policies, so it is not 100% necessary for many individuals.
4. Uninsured/Underinsured
This premium will cause one’s auto insurance company to pay for medical and funeral costs if the other driver doesn’t have auto insurance. It is optional, but since it only costs $40 per $100,000 car buyers might still want to consider investing in it. This is because more and more drivers are unfortunately driving without auto insurance, despite such a practice being illegal.
5. Collision/Comprehensive
Collision liability will pay for a car’s repairs or even replacement should a car owner get in an accident. Comprehensive liability will cover these costs if the car is stolen or gets damaged from a natural disaster. Either type of coverage offer lowered deductibles in exchange for a more expensive initial price. This is why it’s better to get higher deductibles if a car owner wants to pay for these at all. It’s important to keep in mind that payout is limited to a vehicle’s blue book value. If a car is older, the blue book value is going to be so low that it may be better to skip out on these liabilities.
The downside to skipping out on these collision and comprehensive coverage is that a person will have to pay for everything if they get in an accident that is their fault, if the car is lost due to theft or if it is stolen. While any of these scenarios are highly unlikely, they happen often enough that a person should at least consider keeping the liabilities.
Cheap car insurance isn’t always the best solution. Affordable insurance means the right insurance coverage at the best price. Compare and shop the car insurance policy with more than one car insurance company. Researching car insurance online is an easy first step to compare the various low cost insurance offers. Then match your insurance needs before deciding on the best auto insurance quote.
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