What Insurance Policies Should You Have?

In January I asked my LinkedIn and Facebook audiences to guess the number of insurance policies an individual should have? How many policies does a single individual, regardless of marital status and family make-up need? I am happy to report that someone correctly answered that you need 7 insurance policies. These policies include:

Auto Insurance – Auto insurance is typically the first policy we all purchase, for the first car we ever own. Auto insurance provides you liability coverage for damages done to others and coverages for the repair or loss of your own vehicle.

Home Insurance – Home insurance includes renters insurance, condo insurance, and home insurance policies. Similar to auto insurance it provides liability coverage to you as the owner and provides coverage to repair or rebuild your home after a claim.

Schedule Insurance – We all have personal belongings which are valuable and/or difficult to replace – be it jewelry, watches, bicycles, sporting equipment, electronics, art, etc. All home insurance policies have limitations on certain personal items, which is why everyone should consider a schedule policy. Check out this article on the personal items we typically collect.

Umbrella Insurance – While we may never intentional mean to harm some one, catastrophic events do happen and people can be hurt, and we can be able responsible for the damages. An umbrella policy provides additional liability coverage over our auto and home insurance policies should a catastrophic liability event occur.

Health Insurance – When we finally move out of our parent’s home this usually is when we get our own health insurance for the first time. This could be through our employer or an individual health insurance plan. Health insurance covers the cost of our medical care.

Life Insurance – As our family dynamics change we may need to secure a certain lifestyle for our spouse and/or our children should some thing happen to you. Your spouse and/or children may depend on your income and may not be able to continue their way of life if you were to pass away.

Disability Insurance – Similar to life insurance, disability pays to maintain your lifestyle should you be unable to work due to a major and/or permanent medical event. If you are unable to work disability insurance will provide you income.

You may think that you don’t need all of this insurance or that you can’t afford it. With the right insurance advisor you may be able to secure all of these policies at a reasonable cost. What you will not be able to afford is to be out of pocket if you do not have the right insurance when you need it most. By purchasing the right insurance today you will secure your future and that of your family’s.

Home insurance for the first time home buyer

You made an offer on your first new home but now what? Once your offer is accepted you will receive a long list of to dos before you can get to the closing table. One of your to dos is to obtain home insurance. Insurance can be confusing and when you Google insurance online you will you have a plethora of options to pick from. How do you know what you need and what is good insurance? That can be quite the challenge for a first-time home buyer. Here are a couple tips to buying your first home insurance policy.

  • Start the quoting process early. Once your offer has been accepted you should start obtaining home quotes. If you are working with an independent agent, they will have several insurance companies to quote, and the quotes may need to be reviewed by an insurance company underwriter for approval. Delaying the purchase of home insurance could delay the purchase of your home.
  • You will want to get quotes from a few insurance companies. This is where an independent insurance agent can be beneficial to you. Three insurance company quotes are plenty to compare, more than that will cause confusion.
  • You should also quote your auto insurance at the same time. The auto insurance company you are with before you buy your home may not be the most competitive where your new home is now located.
  • You should aim to put your auto and home insurance with the same insurance company to maximize the multiple policy credit offered for having your home and auto insurance with the same insurance company.
  • The purchase price/market value of the home you are buying is different from the replacement cost/rebuild cost of the home. The market value is driven by the desirability of the area which can be driven by schools, retail/dining options, crime rate, traffic/congestion, etc. in the area. The market value also includes the land the home sits on which is not covered by home insurance. Replacement/rebuild cost is driven by the availability and cost of materials and labor today.
  • The minimum deductible for most insurance companies is $1,000 but can be higher. This is your out of pocket should you have a covered claim. It may be wise to have an emergency fund available to cover the cost of your home deductible should a claim arise.
  • An insurance inspection may be performed on the exterior of the home after purchase to confirm there are no insurance issues with the home. This includes the home being occupied and in good repair. They will look to make sure the roof and siding are in good repair, trees are trimmed back and healthy, as well as stairs and decks have railing. The inspection could reveal an issue with the home which will need to be addressed in order to continue the home insurance.
  • Insurance companies in general do not like swimming pools, as they pose an increased liability risk. If there is a swimming pool at the home, you will need to confirm if the pool is above ground or below ground. The pool must also be secured by a fence and/or locking gate/steps. In general, insurance companies do not like swimming pools with slides and/or diving boards, and it may need to be removed to obtain an insurance policy.
  • Many insurance companies do not like trampolines as they as pose an increased liability risk. The home may not be eligible for coverage with several insurance companies due to the trampoline and may need to be removed to obtain a policy.
  • It is best to reveal if you have a dog, exotic pet, or other dangerous animal to your insurance agent when requesting a home quote. Some insurance companies will not approve a policy where a specific dog breed exists. Other insurance companies will want confirmation the dog/pet does not have any bite history or aggressive temperament. Some insurance companies may apply a dog/pet liability exclusion to your home insurance policy.
  • Insurance companies will verify if there are any prior home/condo/renters insurance claims for you, and the home you are purchasing. If there are prior claims, the insurance company will want details as to what transpired. As the new home owner you may also want to know what claims occurred at the home.
  • A standard/basic home insurance policy does not provide a lot of coverage. However, there are several additional coverages which can be added to the policy. Read this blog post to learn more about these coverage options.
  • Water is the #1 cause of loss across the country. You will experience at least one water loss in your home ownership lifetime. There are 3 water coverages that you should consider for your home. Watch this video to learn more about these valuable coverages.

Buying a home is an exciting time. Comparing insurance quotes can make your eyes burn if its not something you do regularly. The tips and tricks above will help you stress less and simplify the insurance buying process. Why waste your time stressing over insurance when you could be planning your house warming party instead. Happy house hunting and cheers to your next home!

Googling homeowners insurance could spell disaster for you.

Have your ever Googled your symptoms even though you know you should’nt only to find out you are dying in the next five minutes?!?

I have done it. I was recently diagnosed with a difficult form of eczema but had convinced myself after Googling my symptoms that I had skin cancer. After hemming and hawing I decided to put on my big girl pants and talk to a professional – my dermatologist. She quickly settled my nerves and told me that greasy lotion was my new best friend and that feeling like a greased pig was a new way of life now.

That’s like Googling home insurance and going with the first website that promises you cheap home insurance. It may seem easier and less stressful to do it yourself but you don’t really know what you need or what’s available. Only an professional can do that.

According to a study completed by JD Power in 2016 74% of new insurance purchasers will begin the buying process online. Of those consumers 25% will purchase insurance online. The rest use other methods, such as insurance agents or insurance company call centers. Now consider that 60% of homes in the US are under insured as stated by Marshall & Swift/Boeckh, and per Insurance Information Institute 1 in 20 homes will have a home claim each year. Those are some scary statistics from my perspective.

I know asking for help is difficult sometimes. My husband easily comes to mind when it comes to asking for help, asking for directions, or visiting a doctor. Hearing, “Honey, you were right.” always feels good. There is a reason there are doctors and there is a reason why there are Insurance Agents. It’s because we need them.

You may think by Googling and searching through a couple options that you have the right insurance. You can’t tell from seeing a few websites what you are getting until you are knee deep in a claim and you are hearing the word “denial” from your claim adjustor when you realize you may need a professional.

You are not paying extra money by using an Insurance Agent. You are asking for some one to build a relationship and trust with you. You are asking for an Insurance Agent to help you insure your home and auto adequately and to educate you about what is available to you. So ask for help and don’t go it alone. You will be glad you have some one to call if and when something happens.

Why Do I Need Renters Insurance?

For many their first home is a rental unit or an apartment. I also did this for a few years. When you go to sign the leasing agreement the leasing office will require proof that you have renters insurance. This is the main reason you purchase renters insurance.

The second reason to purchase reason is to protect you, the renter. There are a few coverages that are important for a renter of a unit or an apartment to have.

  • Contents or Personal Property – This is all the stuff you put into the unit/apartment; furniture, clothing, pots/pans/dishes, electronics, etc. If you lose everything in a fire will you have the money to replace all of your personal belongings?
  • Loss of Use – If you have a covered claim and you are unable to live in your unit/apartment. This coverage will cover the cost of a hotel, apartment, etc. temporarily. You will still be responsible for the rent on your unit/apartment unless the leasing company decides to let you break lease.
  • Personal Liability – If someone slips in your unit/apartment and decides to sue you for medical costs and/or inability to work, etc. this is coverage to pay for the damages or to settle the suit. If found liable for a traumatic event your wages can be garnished by the courts if necessary.
  • Medical Payments – If the same person that slips in your unit/apartment needs medical attention this is good will dollars to get them necessary emergency care.

In addition to these standard coverages you should consider the following additional coverages.

  • Replacement Cost Coverage for Contents/Personal Property – After a covered claim you will want new furniture, clothing, etc. not used.
  • Personal Injury – If you are accused of libel, slander, defamation of character whether true or not you will want coverage which can be provided through this endorsement.
  • Identity Fraud – Now that you are taking on more responsibilities you have a higher exposure to an identity fraud event, which can have long term consequences if you are unable to undo the damage.
  • Water Back-Up – If a drainage system in your unit/apartment backs up into your home you will need coverage for the repairs and personal property damaged. You must add this endorsement to yours renters policy in order to have coverage for this type of loss. This is the #1 cause of home claims across the country.

Many renters assume the leasing company or property manager will cover the cost of a loss to your unit/apartment. The leasing office/property manage can still hold you responsible for the damages and they will not cover you for the loss of your personal belongings or your liability as the occupant of the unit/apartment.

Overall the cost of renters insurance is minimal at around $200 a year or $15 monthly. While renters insurance may feel unnecessary it is important in order to maintain your financial independence.

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