Life Insurance 101   Leave a comment

The scenario: You’re a human.  You fall somewhere between the ages of a day old and 85 years old.  You (or your parents) realize that no one exits the human experience by skirting around the inevitable mortality event.  It is part and parcel of being human; a shared story common to the race.

The problem: In your experience, you recognize that the purchasing power of money is quite a useful tool.  Actually, it’s quite likely you would be pleased in having more of this kind of tool.  It leverages.  It elevates.  It persuades.  Perhaps more than anything, it turns dreams into potential… the wild machinations of the mind into hard, cold realities.

The truth is, for most Americans – at least within a certain age demographic – we are wealthier than we realize, though not as wealthy as we’d like to be.  Few of us are really good at long-term planning.  Fewer yet at long-term saving.

The oh, aren’t you glad there’s a solution:  You won’t need a light bulb to turn on this solution.  You already know it, although you might not like to talk about it.  It’s life insurance.  Yep.  Risk pooling, in all its glory.  “But there’s nothing’s worse than life insurance,” you say, “is there?  Other than taxes.”  Au contraire…

Now that you know the solution, let’s explore the options.  Some are wiser than others.  Some just pragmatic and rational.  As you read this, you may wish you could go back in time and do it over again, only this time in a wiser frame of mind.

You’re probably familiar with the detail that the ‘www’ has more opinions about every subject known to man than you can possibly live long enough to sort through.  Don’t feel bad: you haven’t been singled out.  Do you have an ache?  Maybe a stabbing pain?  Go self-diagnose it on the Internet.  Ha!  Good luck!  It’ll tell you to pluck out your eyeballs and saw off your arms.  “Oh,” but you say, “the pain is in my foot.”  Well, sometimes you’ll get referred pain like that.

The kinds: Term, universal life, whole life.

Term.  Term insurance is known in the insurance industry as “pure insurance.”  It is most often sold without bells and whistles, much like a new car without a radio.  Term insurance is designed to cover a period of time (a term), beginning on the date of x, concluding on the date of y.  During that period of time, the insured’s life is covered against the risk of death.

Example:  Sam buys $1,000,000 coverage for a 20-year term.  Sam is 44 years old.  His premiums will be (somewhat) low, because at the end of 20 years, he will no longer be covered by this policy, and, actuarially speaking, because the likelihood of his death during these years is low.  However, by purchasing this policy, Sam clearly demonstrates that a.) he loves his wife and children, and is concerned about their welfare in the aftermath of his passing, b.) he recognizes there is mystery regarding the unknown date of his death, and c.) buying insurance is an excellent gauge of human responsibility.

His attained age will be 64 years when the policy completes its contractual obligations.  He smokes cigarettes, but like he says, “It’s only 1 pack a day.”  He drinks a little rum and coke when he gets home from work because, “Hey, if you had my job, you’d drink twice what I do!  Believe me.”  Sometimes he drives and drinks.  (Just a short word or encouragement for you, Sam: this is not clever.)  He had a DUI, on his 50th birthday.  Sent a family of 3 to the hospital.

During the period of his coverage, his life has seen more twists and turns than he could have possibly anticipated.  He and his wife had another baby.  Whoa!  Surprise, Sam!  He lost his job – twice.  He’s beginning to wish he didn’t like French fries near as much as he does.  He’s gained 140 pounds and already had a heart attack, 5 years and 3 days on the back side of the DUI.  He has diabetes.

In our example, Sam has lacked an important and vital component of a thorough game plan: namely long-term strategy.  Many people applaud him for having shown the horse-sense in buying insurance.  We salute you, Sam.  Although we believe you could have planned better for you and your family, you did what needed being done.

“Sam?” asks the insurance agent.

“Yeah.”

“Sam, do you mind if I ask you a question?  I mean, I know it’s kind of retrospective and everything, but… well, now that you’ve seen how much your new term policy is going to cost you, do you think you would have done anything differently?”

“Uhh, yeah.”

“What?” asks the Inquisitive Producer.

“Do you mind if I get back with you on that?  I’m kind of focused on sticker shock at the moment.  Say, isn’t there a Wendy’s close to here?”

“Sure, sure, Sam.  I understand.”

Term insurance recap: 

  • It covers a term period.
  • It pays on one condition only: if the insured dies during the term.
  • The premiums are low and level (the same throughout the term of the policy)
  • It generally does not guarantee re-insurability.
  • It has no cash value. There are no policy loan or withdrawal allowances.  When the policy dies, and you’re still alive (assuming you are), your premium money is gone.
  • It offers one, singular guarantee: to pay a death benefit in the event of death during the term.
  • Its owner lacks the ability for the policyholder to skip the premium payment if he or she so desires.
  • It lacks adjustability of duration (unless the policyholder stop paying the premiums, then it lapses).
  • It doesn’t take into account that as each year passes, the replacement policy at the end of the term will be more expensive. And, the insured may no longer be insurable.

Universal life:  Often called a hybrid, universal life is the ‘compartmentalized’ look-alike of its twin sister, whole life.  Universal life and whole life are known as “permanent insurance.”  The essential difference between them is that universal life is flexible in many ways that whole life isn’t.  Sometime this is good, sometimes it isn’t.

Example: Todd buys a $1,000,000 Universal Life policy.  As the name implies, its duration is for life.  Todd is 26 years old.  “Ah, you’re a smart lad, Todd,” his insurance agent beams as he hands him the policy.  “I wish I’d had your smarts when I was 26!  Alas, I didn’t.  Lots of water under my bridge, Todd.  Anyway… good move.”

Todd’s UL policy will last for the rest of his life.  His agent reminded him to pay the premium every month as long as he was able.  “Do your absolute best, Todd.”  This is where universal life takes a fork in the road from whole life.  If Todd doesn’t pay his premiums – because of whatever – the policy will pay them for him, but not without deteriorating ramifications.  We would all do well to remember: there’s no free lunch in the real world.  Furthermore, this is not something Todd can or should do often, or repeatedly without the policy withering away to nothing, at last lapsing (dying).  He’s borrowing from the cash reserves of the policy.  The very same cash which has been building a private wealth machine in his own name and for his benefit.

As long as he watches the P and Q’s of his ‘unbundled’ policy components, like, for example, the monthly mortality charge, he’ll do all right.

Universal life recap:

  • Flexible, transparent, backed by conservative investments.
  • Unbundled.
  • Flexible lifetime, extending to death.
  • Adjustable duration.
  • Adjustable death benefit.
  • Cash value if properly funded.
  • Policy loans, withdrawals available.
  • Crediting rates disclosed to policyholder.
  • Mortality charges disclosed to policyholder

 

Whole Life:  Not many years ago, General Motors’ Cadillac was a prized brand.  Anything that was the best in its class was simply called a Cadillac.  The finest house was a Cadillac.  The best restaurant, a Cadillac.  The nicest TV was a Cadillac.  Whole Life – now there’s a Cadillac for you.  The Cadillac of life insurance.  People bought Cadillac because of its reputation, because of its inherent quality.

Whole life, again, like universal life, is a lifelong contract between insurer and insured.  One element keeps its clock ticking: the premium.  The level, unchanging premium (monthly, semi-annually, or annually), is the same throughout the life of the contract (although some contracts may be paid within a defined time period: single pay, 10-pay, to 65, etc.).  These policies build a cash bank of reserves available to policyholders.  A large portion of the reserves are at the disposal of the policyholder, who may willingly leave them untouched, all the while building more and more value, as well as adding to the value of the death benefit.  They may also be used, as simply as filling out a form.  Imagine wanting a new car, asking the insurance company to send you the money, and voila! it’s yours.  Imagine using it to fund your children’s college, and paying it back on your timetable, where there’s never a late payment.  Imagine every time you make a payment, you are increasing your tax free death benefit to the ever thankful advantage of your beneficiaries.

Example: Charlene is 30.  She buys a $1,000,000 whole life policy.  It’s like having her own private bank.  Ten years later, her dear Grandma passes away.  She inherits $100,000 and adds the money to her dividend earning, compound-interest earning, legacy-creating whole life policy.  She bought the policy for its death benefit for her three children, but as she ponders the many benefits of her super fine financial vehicle, she realizes it’s one of the smartest financial decisions she’s ever made.  A year after Grandma dies, her first child, Jules, is headed off to college.  She’ll fund it for him, by loaning him $30,000 a year.  Her loans will not be taxable.  He’ll pay her back when he graduates, and has a job in his field.  She’s okay with that, there’s no rush.  No late fees, no credit bureau reports.  If she wanted to, she could use her insurance policy to collateralize the loan at the bank.  But as it is, she’s pleased with her plan, and continues paying her premiums.  She could also let her policy self-fund for a while, but remembers the adage that fat pigs get fatter the more you feed them.  Nine years later, Jules has lived up to his word, and the loan is fully re-paid.

She’s done the math.  If she wants to, as she nears retirement, she can rollover her $700,000 cash value into an annuity without a tax hit, using a 1035 Exchange, but she doesn’t have to do that to use it.  Life’s good.  She’s loaned each of the children enough money to finish their degrees.  They’ve all paid her back.  The kids are taken care of.  Sure, they all have their own insurance now, but she’s covered, and so are they in her tax free distribution plan.  Her death benefit has swollen to a million and a half dollars.

An unexpected medical turn of events takes Charlene by surprise.  At least the insurance is okay: the Inquisitive Producer added a disability rider back when she bought the policy.  From now on, her policy won’t require premiums.  She’s 64.  She’ll retire a little early.  She’ll withdraw $30,000/yr. until she hits full retirement age (about $15,000 more than Social Security would have paid her).  Now, at 66, instead of having her Social Security deposit into her local checking account, she’ll have it deposited into her insurance policy and take tax free loans on it to fund her retirement – all the while, feeding the fat little porker.

Whole Life recap:

  • Straight, level premiums
  • Ability of policy owner to borrow or withdraw… for ANY purpose, without loan officer approval.
  • No issue with insurability – it’s guaranteed for life, no matter how sick, unhealthy, or uninsurable you become.
  • Policy loans are not taxable and guaranteed. It’s the policyholder’s decision if loans will, or will not be repaid.
  • Tax free distributions to beneficiaries.
  • Many crediting rates/insurers include non-guaranteed dividend income.
  • Some policies create high early cash values.
  • Outstanding “living” benefits for policyholders AND their beneficiaries.

Well, there’s the breakdown, friends.  Perhaps we haven’t met.  Hi.  My name is Scott Olive.  I’m the Inquisitive Producer, the new one on the block over at Lee County Insurance Agency.  Maybe you can carve out a little time for us to sit down and discuss your future.  No pressure, I promise.  I won’t bring a firehose with me – because you’ve got things going on in your life, and I don’t need to bowl you over by selling you something that doesn’t fit your outlook.  Then again, if you’ve got five minutes for my story, you might re-think how to plan your own.  There’s no one size fits all for me.  Probably not for you, either, huh?  You may not want or need a Cadillac (u-hum, I mean, a Mercedes).  That’s fine… Fiat’s more your style.  Great!  We’ve got them, too (figuratively speaking).

I’d like to leave you with this: if you don’t already have life insurance, or you think it’s time to review where you stand financially with what you have, don’t you owe it to yourself to investigate your options?  Don’t you want to break out of the mold, and find out what freedom is all about?  Life insurance can be an evil necessity.  But it can also be a joyful foundation for a bright future.  You don’t really believe that Social Security, with both of her broken legs, a bad heart, and her very serious concussion, will survive for long, do you?  Isn’t it time to take matters into your own hands?

One other final thought.  Just in case you think I’m in this only for the commissions, that proves how well you don’t know me.  Hey… you’ve got the Internet… see for yourself that life insurance and annuities are the backbone of the wealthy (more on annuities later).  They know!  Believe me; they’ve studied it.  The sooner you start, the better.  The longer your view, the more better (u-hum).  I don’t believe in tricking folks, and I don’t believe in lying, either.  No matter how hard the truth may be.  I’m old enough to know a few things, young enough to hold my own.  Oh, yeah… and your story’s much more important than mine.  Because it’s not about me.  It’s about you.

”Our blogs are for general education and information only and may not represent your unique needs. Coverage will vary. Please contact your agent to verify your specific policy terms and conditions.”

Posted June 3, 2016 by leecountyinsurance in General Info, Life

Best ways to prevent a big increase in Auto Insurance rates   Leave a comment

What is the one thing that consumers do that causes auto insurance prices to go WAY up? You may be surprised to know that it is NOT necessarily a ticket or violation but rather a lapse in coverage. That’s right if you allow your policy to expire and have a gap between policies or you simple fail to pay your insurance bill this can cause an increase as high as 50%. Why? It is the law and you are required to have coverage in order to maintain a license tag in Florida. Just as the State considers it unacceptable and irresponsible to drive without insurance so do insurance companies.

So what’s the best way to prevent a lapse? That is simple, most companies offer an EFT payment option which actually often gives you a discount as well as a much lower down payment in exchange for electronically accepting payment each month automatically from your account.

Another tip for BIG savings, Pay your policy in full instead of making monthly payments. This is not always an option when cash flow is limited and that is why payments plans exist but it frequently can be 20% savings to pay in full for 6 month or a year. The Department of Insurance allows companies to submit rate changes twice a year in most cases so if you get a 12 month policy instead of 6 months you may push that rate increase off for another 6 months.

If you think your insurance rates are too high give us a call or check out our website to request an instant quote online. Have your policy and vehicle information handy for the most accurate quote.get-quote-button

”Our blogs are for general education and information only and may not represent your unique needs. Coverage will vary. Please contact your agent to verify your specific policy terms and conditions.”

Posted February 5, 2015 by leecountyinsurance in Automobile (Personal)

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What Listing as a Driver does and doesn’t do   Leave a comment

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When analyzing coverage under an auto policy it’s very common to hear someone say, “Just list them as a driver and that way they are always covered.” Considering the number of times this statement is made, perhaps it’s warranted to look at what listing someone as a driver does do, and more importantly what it does not do.

When someone is listed as a driver on an auto policy it’s done purely as an underwriting tool to allow the company to obtain the motor vehicle report (MVR) of the person listed. For example, on a personal auto policy (PAP), most companies want to list all household residents and any other regular operators of the vehicle. On a business auto policy (BAP), most companies want to list all employees who regularly drive the insured vehicles. Listing the drivers allows the company to properly underwrite the risk, surcharge for violations or accidents, and where warranted cancel or non-renew the risk.

To determine coverage under an auto policy, the “who is an insured” section of the policy must be examined. With a PAP “who is an insured” includes the person named, resident spouse, family members who reside in the household, and anyone using the covered auto with permission. Note that nowhere does the “who is an insured” section state “those listed as a driver are also insured.” For example, Henry’s PAP names him as named insured and his daughter Samantha as a driver. Henry loans the car to his friend Mary, who is in an at-fault accident. Since Mary is a permissive user she is “an insured” under Henry’s PAP even though she is not (and does not need to be) listed as a driver. As another example, Samantha goes out of town and borrows a friend’s car, is negligent, and injures a pedestrian. Samantha is “an insured” under Henry’s PAP, not because she is listed as a driver, but because she is a “family member.” Thus Samantha is covered by the Henry’s PAP.

As an example of how listing someone as a driver does not provide coverage, consider the situation where Henry and Mary are not married and living together with Henry owning the only car in the household and having a PAP in his name. Since Mary would regularly drive Henry’s car, his PAP carrier should be notified since they will want to list her as a driver. When Mary is driving Henry’s car she is “an insured” because she is a permissive user. The fact that she happens to be a listed driver does not affect coverage. However, have Mary go out of town, rent or borrow a car and have an at-fault accident she will not be covered by Henry’s PAP, even though she is listed a driver. She is not covered because she is not the named insured, the spouse, a family member, or driving Henry’s auto. The only time Mary is “an insured” under Henry’s PAP for liability, med-pay, PIP, UM, and physical damage is when she is occupying Henry’s auto. This presents a significant gap for Mary and she is a candidate for the Named Non-Owner policy under which she can purchase liability, med-pay, and uninsured motorist coverage.

A recent court case in Louisiana illustrates this point very well. The insurance company issued a PAP to Robert, who was the only named insured. His fiancée, Jennifer, lived with him and was listed as a driver on the declarations page. Jennifer was driving a non-owned auto owned by her sister-in-law and caused bodily injury to a third party who brought suit against Jennifer and others. Jennifer sought coverage under Robert’s PAP, claiming that she was covered by virtue of being listed as a driver. The Louisiana Supreme Court found no coverage under the policy stating, “…being listed as a driver on the declarations page does not transform that person into a named insured.” The court also found that Jennifer was not a “family member” as defined by the policy. (Lemoine v. Illinois National Insurance Company, March, 2004)

The same principles apply to the business auto policy. Employees listed as drivers would have coverage while driving an auto covered under the BAP, but not while borrowing or renting another vehicle for pleasure use. They would find coverage for those situations under their own PAP or Named Non-Owner policy should they have one, or possibly by adding the Drive Other Car endorsement to the BAP.

Remember, “Listing as a driver does not affect coverage.”

” Our blogs are for general education and information only and may not represent your unique needs. Coverage will vary. Please contact your agent to verify your specific policy terms and conditions.”

Courtesy of FAIA, Authored by David Thompson, CPCU, AAI, API

Posted July 18, 2014 by leecountyinsurance in Uncategorized

Business Interruption Insurance, You probably need it, but do you know why?   Leave a comment

Does your company need “Business Interruption Insurance?” C/O Jerry Osteryoung

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Business Interruption Insurance (BII), which is intended to compensate the company for income lost in the event physical damage renders it inoperable for a period of time, can provide so much value in so many ways.

Above and beyond basic BII coverage, you have a couple of add-ons. Extended Business Interruption Insurance provides coverage for losses sustained after repairs are complete but before income returns. It is typically limited to a finite period of time. Contingent Business Interruption Insurance provides coverage for income lost as a result of physical damage, not to the insured’s property, but to the property of providers, suppliers or consumers of its products or services.

To recover BII benefits, the business must prove it sustained damage to property covered by the policy and that the damage was caused by a peril listed in the policy. Additionally they must prove the property damage caused them to lose business income. The loss must be a direct result of that interruption and not linked to any other factor.

All BII policyholders are required to use the same basic formula to calculate claims based on lost net profits. If a company sells a product for $200 and spends $170 assembling or acquiring it, its policy will cover $30 per loss. Dollar limits are determined by an estimate of the company’s total potential net profit losses.

I think BII is necessary for most businesses, but it is important to note that purchasing any coverage is not going to be good enough. You need to be so careful to select the policy that works for your business.

Recently, I worked with one firm that produces wood products in a very large factory. They purchased BII for a reasonable amount of money, and their policy has been in effect for more than 10 years. Then about six months ago, the factory burned to the ground.

The owner and managers knew they had a $3.2 million BII policy to fall back on, but for months, the insurance company refused to pay the claims citing improper paperwork. Out of desperation, the firm hired their own adjuster and is finally making progress towards getting some cash out of their policy.

This company had BII insurance, but if the owners had not been able to bankroll the operation, they would not have survived. They would have gone belly up while trying to straighten out these issues with their policy.

When I asked the company what they learned from this very difficult situation, they said they should have read their policy carefully. Their policy was 100+ pages, and they just had not taken the time to go through it when they purchased it.

Now go out and determine if you need Business Interruption Insurance. If you do, be sure to read your policy in detail so you understand the risks the insurance company is taking and the risks you are taking

Posted May 5, 2014 by leecountyinsurance in Uncategorized

UM: Benefits Beyond Medical Bills   Leave a comment

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At the break in a class I overheard a student say, “My husband is in the military, so we don’t need uninsured motorist (UM) coverage.” The same comment could be said by someone who had PIP coverage, auto medical payments coverage, health insurance, disability insurance, Medicare, or even workers’ compensation coverage.

Clearly, the benefits provided by the military, PIP, auto medical payments, disability insurance, and workers’ compensation can be substantial. Even as good as those benefits are, however, there are expenses not covered under those policies that would be covered by UM. Remember, UM pays what the insured is legally entitled to recover from the at-fault party. Often, monetary damages awarded by a court include things that none of the earlier referenced policies (or military benefits) will cover.

Let’s take a look at this issue by way of example and see what the benefits of UM coverage are, beyond just reimbursement for medical bills.

Suppose Bill is involved in a hit-and-run auto accident and is seriously hurt by the at-fault party. He is protected by a personal auto policy (PAP) with $50,000 of PIP (he increased the $10,000 basic limit to this higher amount after seeing the small additional premium charge) and $5,000 of auto medical payments coverage. His auto policy includes $250,000 of UM coverage and his personal umbrella includes $1 million of UM. Bill has no disability income policy. Additionally, he is covered by a health insurance policy provided by his employer.

As a result of the accident the following expenses and losses were incurred by Bill:

  • $75,000 for prior medical bills.
  • $175,000 for future medical bills.
  • $20,000 for prior lost wages.
  • $300,000 for future lost wages.
  • $1,000 for a wheelchair since Bill is unable to walk now.
  • $10,000 for future wheelchairs.
  • $30,000 for a special van to transport Bill and his wheel chair.
  • $90,000 for future vans.
  • $20,000 to retrofit the house to accommodate the wheel chair.
  • $25,000 for a yard service for Bill’s remaining life expectancy, since he is unable to cut the yard now.
  • $100,000 for future pain and suffering.
  • $100,000 for the loss of “family comfort” with his wife.
  • $100,000 for the loss of the ability to coach youth softball.
  • $200,000 for future loss of the enjoyment of life.

Looking at the insurance that Bill has (disregarding the UM for now) what is seen is that the PIP and auto medical payments coverage are quickly exhausted. Bill can fall back on his health insurance, but keep in mind that he will likely incur a deductible plus a co-pay each year. Once Bill’s PIP is exhausted, his wage-loss protection is gone and with no disability income policy he is “up the creek.”

Suppose, however, that the accident happened to be work related and thus covered by worker’s compensation. In such case, Bill’s medical expenses would be fully covered, subject to the provisions of the workers’ compensation law. Bill’s lost wages would be paid, typically (in Florida) at 66.67 percent of his wages. The time period for which workers’ compensation will respond for lost wages varies from two years to a lifetime, depending on the type of disability. Remember, too, wage loss benefits are subject to a maximum per week, which in Florida is around $850 per week. The wage loss benefits paid to Bill by workers’ compensation would not fully replace his salary.

With or without workers’ compensation coverage, consider the monies awarded to Bill for which he has no coverage, except under UM. The excess medical expenses, lost wages, wheelchair, van, house modifications, yard service, pain and suffering, loss of family comfort, and all the other damages listed above would be covered by UM.

Of course UM isn’t always an inexpensive coverage, but when the cost is compared to what most folks spend on cable TV, cellular service, a country club membership, or eating out for dinner twice a month, the cost for UM is probably the lowest listed.

Even if someone is in the military, is retired, and/or has “a lot of other insurance,” the protection provided by uninsured motorist coverage is very valuable. Don’t be so quick to reject this valuable coverage.

” Our blogs are for general education and information only and may not represent your unique needs. Coverage will vary. Please contact your agent to verify your specific policy terms and conditions.”

Courtesy of FAIA, Authored by David Thompson, CPCU, AAI, API 

Crash Statistics 2013   Leave a comment

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Annual Global Road Crash Statistics

  • Nearly 1.3 million people die in road crashes each year, on average 3,287 deaths a day.
  • An additional 20-50 million are injured or disabled.
  • More than half of all road traffic deaths occur among young adults ages 15-44.
  • Road traffic crashes rank as the 9th leading cause of death and account for 2.2% of all deaths globally.
  • Road crashes are the leading cause of death among young people ages 15-29, and the second leading cause of death worldwide among young people ages 5-14.
  • Each year nearly 400,000 people under 25 die on the world’s roads, on average over 1,000 a day.
  • Over 90% of all road fatalities occur in low and middle-income countries, which have less than half of the world’s vehicles.
  • Road crashes cost USD $518 billion globally, costing individual countries from 1-2% of their annual GDP.
  • Road crashes cost low and middle-income countries USD $65 billion annually, exceeding the total amount received in developmental assistance.
  • Unless action is taken, road traffic injuries are predicted to become the fifth leading cause of death by 2030.

 

Annual United States Road Crash Statistics

  • Over 37,000 people die in road crashes each year
  • An additional 2.35 million are injured or disabled
  • Over 1,600 children under 15 years of age die each year
  • Nearly 8,000 people are killed in crashes involving drivers ages 16-20
  • Road crashes cost the U.S. $230.6 billion per year, or an average of $820 per person
  • Road crashes are the single greatest annual cause of death of healthy U.S. citizens traveling abroad

” Our blogs are for general education and information only and may not represent your unique needs. Coverage will vary. Please contact your agent to verify your specific policy terms and conditions.”

Courtesy of ASIRT

Why is My Neighbor’s Insurance Cheaper than Mine? Differences in Homeowner and Auto Policies   Leave a comment

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Why is my neighbors insurance cheaper than mine? That might be a question you’re asking yourself after finding your neighbor is paying less on their car or homeowners insurance than you are. And while that shouldn’t necessarily foster bad relations with your neighbor, there isn’t any neighborhood profiling going on that singles you out to pay more. When it comes to insurance, there’s still a mistaken notion that what neighborhood you live in and what your income is will determine a standard rate for everyone. The truth is, insurance goes with the variables of an individual’s life.

Why You Might Be Paying More for Car Insurance

You might still be confused that you’re paying a higher car insurance premium when you and your neighbor even have the same car. However, ask your neighbor what year their car is. Is the car a few years older than yours? If it is, it may explain why your neighbor pays less.

Also consider that driving records will make a considerable difference in insurance rates. It’s possible that your neighbor has never been in an accident or had a speeding ticket. Conversely, perhaps you have and should go pay that outstanding traffic ticket before it starts to compound.

Unfortunately, gender can also have much to do with rate fluctuations as well. If your neighbor is female, chances are that she pays less than you do because men are noted to have more car accidents. As unfair as this might seem, you can blame it all on the obsession over studying statistics. The real differences are usually in the policy details, limits of coverage and specific coverages. If your neighbor does not have bodily injury coverage and you do, well your neighbor is not properly insured and could have significant out of pocket expenses if they have a claim. That’s not a cost saving measure, that’s what we call self insuring without knowledge of it. 

Variables are ultimately numerous in the world of car insurance, including marital status and even how good your credit is or isn’t. The most recent factor that can make as much as a 20% difference is simply choosing to pay for the policy in full instead of making monthly payments, Or choose to do payments via EFT automatically out of your checking account each month, that also gives you a discount. But don’t think it stops here, because homeowners insurance utilizes similar circumstances, including so much more.

Why You Might Be Paying More for Homeowners Insurance

Paying a higher homeowners insurance premium than your neighbor might be more perplexing than the differences in car insurance. Coverage limits are going to make significant differences in how much you’re paying in comparison to a neighbor. Nevertheless, you can take heart in knowing that your coverage limit is significantly higher, which means you’ll have compensation after a disaster while your neighbor may not.

Also consider that some people choose to eliminate added insurance coverage for certain things like slow water leak damage or foundation coverage. While your neighbor can be deemed slightly crazy if he or she doesn’t have coverage for these possible disasters, you won’t have to worry about that designation. Regardless, if you have coverage for something that’s less likely to happen in your region, you might be able to follow your neighbor’s lead and eliminate it to equalize your premiums. Some policies do not include coverage for screen enclosures, others exclude water damage, roof damage, or just have higher deductibles. Some don’t provide replacement cost coverage but rather pay you based on depreciation. That can be a costly option when you have a claim. Claims history, payment history and financial responsibility are all factors that are specific to each person.

Florida companies are now using what is called “Single Risk Modeling”. This literally takes many factors into consideration including things you would have never thought of. The direction your house is facing could result in a different cost or even make your home ineligible, Now before you go crazy, remember it is all about the risk and the companies have years of data and millions of claims in just 2004 and 2005 to show what is a higher or lower risk. If your home has a carport it is likely to be damaged if a hurricane approaches. But the direction that the wind blows during a hurricane is known, so if your carport faces into the path of the wind from an approaching hurricane it is a higher risk. The same exact house across the street could be no problem. All I ask is that you don’t shoot the messenger. I don’t trust the weatherman anymore than I could throw him but claims data is real and computer modeling is relied on more and more. So, Wind mitigation factors are the new discount for Florida property owners. The “harder” your home is against wind, or to say it simply, the things you do to prevent damage from wind, the more cost savings your could see. Hurricane shutters can’t just be tested anymore, they have to be tested AND APPROVED in order to qualify for the discount and every opening to the home must be protected, doors, windows, skylights even the garage door must be rated to withstand wind and impact. If any of these openings are not properly protected no discount will apply for opening protection. The shape of your roof, Hip vs. Gable, the age of your roof, if your roof complies with the current building code or not and of course the type of hurricane straps your home has is also a factor that determines the price of your insurance. As with any insurance policy the best advice is to talk to your agent and determine what is best for YOU, not your neighbor. 

” Our blogs are for general education and information only and may not represent your unique needs. Coverage will vary. Please contact your agent to verify your specific policy terms and conditions.”

Posted January 3, 2014 by leecountyinsurance in Uncategorized

Renters Insurance 101   Leave a comment

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Before you embark upon finding renters insurance, you’ll want to have a solid grasp on what it is and why you need it in the first place. Here we’ll give a brief explanation of renters insurance, explain why you need it, and tell you what it covers.

Why Have Renters Insurance

A lot of people have the misconception that, because they rent their home, they are exempt from needing insurance protection. This could not be further from the truth. Insurance is not just for homeowners, and here is why.

  • Liability protection. Lawsuits abound in today’s society, and, if one were brought against you, it could mean financial ruin. Accidents happen all the time, and you don’t want to end up financially devastated because of a mistake you made. Liability protection covers inadvertent damage to property or bodily injury that you case. For example, if a fire starts in your apartment because of your negligence, the other tenants could potentially bring legal action against you. Accidental occurrences, like someone tripping over something and hurting themselves in your apartment, are likewise covered.
  • Landlord policies do not cover personal belongings. Remember that the average renter has over $20,000 in personal property that a landlord’s policy would not cover. In the event that the items inside your residence were ever damaged, stolen, or vandalized, renters insurance would reimburse you for your losses.
  • Renters insurance is Inexpensive. When you compare the cost of renters insurance with what you stand to lose if you don’t have it, it underscores how inexpensive coverage is. There is no one who rents that should not have renters insurance.

What Renters Insurance Covers

Renters insurance policies will specifically state the events against which you are insured. Typically, the major events include:

  • Smoke damage
  • Vandalism
  • Fire
  • Lightning damage
  • Wind damage
  • Theft
  • Vehicle/aircraft damage
  • Water-related damages

Aside from the aforementioned perils, your renters insurance will also include liability protection, which means you are covered in the event that you cause unintentional property damage or personal injury to another person. Usually, the policy will even cover your legal fees, if necessary. Renters insurance typically also includes medical payments coverage, which covers the medical expenses of a person who does not live at the insured property.

“Our blogs are for general education and information only and may not represent your unique needs. Coverages will vary. Please contact your insurance agent to verify your specific policy terms and conditions.”

Auto Insurance Coverage for Teen Drivers with Divorced Parents   Leave a comment

When a teenager receives her driver’s license, she often will be added to her parent’s auto insurance policy. But if her parents are divorced, teen car insurance could become a bit confusing.

A father teaching his teenage daughter how to drive.

 

Insurance companies and states have different requirements regarding coverage of additional drivers on an insurance policy, but here are some tips to review if you have a teenage driver with divorced parents:

If your teen has access to driving vehicles at both parents’ houses, then both parents might need to add him or her to their individual policies. Some companies may require that the parent with custody add the teenage driver to their policy. Divorced parents may want to contact their insurance companies to find out what is required in their situation.

Every state requires licensed drivers to have auto insurance coverage, which includes teen drivers, even those with a permit, when driving. If you have a teenager in your household who may be on your former spouse’s insurance, it may be a good idea to find out if your insurance would cover your teen while driving your car.

Safe driving techniques can help all family members save money on car insurance. Teaming up with your former spouse to encourage, educate and even monitor your teen might help to make him or her a better driver. Car crashes are the No. 1 cause of death for teenagers, according to the Centers for Disease Control and Prevention.

 

No matter which parent carries their teenager’s insurance, both can set rules for the use of the car. Here are some suggestions:

  • Prohibit cell use and texting when in the car.
  • Limit the number of passengers in the car when your teen is driving.
  • Establish a boundary of where your daughter can take the car.
  • Encourage your son to call you at any time for a ride if he feels he, or another driver, isn’t fit to drive—no matter what the situation is.
  • Require everyone—drivers and passengers—to wear seat belts.

Having a teenage driver in the family is always an exciting time for everyone. If you have a change in your family situation, contact your insurance agent to determine if any changes are needed for your policy.

“Our blogs are for general education and information only and may not represent your unique needs. Coverages will vary. Please contact your insurance agent to verify your specific policy terms and conditions.”

Courtesy of Allstate

Cheap Auto Insurance: The Hazards of Choosing Cheap Car Insurance   Leave a comment

Dangers of cheap auto insurance: pitfalls of choosing a cheap car insurance provider.

If you own a car, truck or other motor vehicle, most states require you to purchase Auto Liability insurance, which can protect you and your passengers in the event of a covered loss.

Auto insurance rates are based on many factors and quotes can vary widely. Among the factors that insurance companies often consider when setting rates are age, gender, driving history, and the year, make and model of the vehicle. Additionally, in some states insurers can consider credit histories when providing rate quotes.

If your car is financed, your lender will likely require you carry some form of Comprehensive insurance (sometimes known as “Other than Collision Coverage”). This type of insurance protects you against damage caused by things other than a vehicle collision such as fire, hail, flood, vandalism or theft. Collision insurance is coverage that applies to your vehicle if it is damaged as a result of colliding with another object—another vehicle, for example, or a tree.

Here are some tips to consider while shopping for a quality provider and affordable rates:

  • Check with an Independent Insurance Agent. They can provide you with more than just one quote from several companies. And the best part is they work for you, not the insurance company.
  • Maintain a clean record: A good driving history is your best defense towards obtaining and maintaining affordable insurance. Obey traffic laws, keep a light foot on the accelerator, and—if you choose an insurer that uses credit scoring in their evaluations—pay your bills on time.
  • Bundle your insurance: Many insurance companies sell other types of insurance, such as homeowners, renters or condo insurance, or mechanical breakdown protection. Consolidating your insurance policies with a single provider can create a substantial discount on your premiums.
  • Drive an economical car: Insurance rates are partially based on the type of car you drive. If your vehicle has low safety ratings, a high theft rate or a high incidence of vandalism, you may pay a higher premium.
  • Don’t give inaccurate answers or try to mislead. Most of the time consumers “think” they know the correct answers in order to keep prices low. In most cases they are costing themselves money instead of saving and it will likely lead to an      uncovered claim if you lie about anything on an application. Be honest and your agent will have your back. If you choose to buy coverage directly from a website or 800 phone number, you have no agent to assist you.
  • Listen to your agent. If you don’t know the difference between Bodily injury and Personal Injury, how do you know how      much coverage to buy? Your agent is there to help you make an informed decision about proper and adequate insurance protection. If you don’t understand what they are saying, ask for clarification. If you don’t purchase what they suggest you cannot blame them for not having enough coverage when you have a claim.

“Our blogs are for general education and information only and may not represent your unique needs. Coverages will vary. Please contact your insurance agent to verify your specific policy terms and conditions.”

Posted November 19, 2013 by leecountyinsurance in Uncategorized