How To Insurance

Can You Afford Not to Have Auto Insurance?

2008-10-19T18:19:00.000-07:00

Most states in the United States require auto insurance. If you are financing your car, the bank is going to require you to carry auto insurance, and having auto insurance is just good sense.

The liability portion of your auto insurance policy pays for damages you are liable for. This is what the state is worried about. If you have an auto accident that is your fault, the liability will pay for personal injury that you have caused to others. The liability will also pay for the property damage you may be responsible for: the light pole you crashed into, or the car you hit, or you went off the road and tore up someone's lawn, or maybe you kept going and slammed into the house.

The comprehensive and collision coverages on your auto policy pay for the physical damages to your car. The bank is concerned with that. If they repossess your car, they don't want to repossess a piece of junk!

Comprehensive coverage will cover fire,theft,vandalism and glass breakage. If someone steals your car, the comprehensive portion of your auto policy covers that. If your windshield gets broken, comprehensive covers that. If someone keys your car, the comprehensive coverage also takes car of that.

Collision coverage covers crashes. If you have an auto accident and it is your fault, the collision coverage will pay for the repairs to your car. If someone hits your car and takes off, the collision coverage will pay for the repairs.

If something happens to your car, can you afford to fix it on your own? Auto repairs are expensive. Do you have the extra cash lying around that you can afford to fix your car on your own? It would probably be cheaper to pay the insurance premium and let the insurance pay for the repairs.

So, can you afford to not have auto insurance? If you have an auto accident and it is your fault, you are responsible for the damages you have caused. The medical bills and the property damage. If you have auto insurance, the insurance will take care of that. The auto insurance will also pay for the repairs to your vehicle. Do you have the extra funds to cover all that? Chances are, it would be less expensive to purchase auto insurance.

Broken Windshields: Repair or Replace?

2007-03-28T18:07:00.000-07:00

So you've got a broken windshield. You have zero deductible on the comprehensive coverage on your auto policy, so you're going to get the windshield replaced. Right? I mean, a repair may only cost 20 to 50 bucks, and the average windshield is between $300 to $500, so you want to get your moneys worth.

Hold on one minute. You may want to consider getting the windshield repaired. First, is the damage in the driver's direct line of vision? If it is, forget it - go straight to the repair. If it is not, it may be repairable. Is it a star crack? The size of a quarter or smaller? It may be repairable. Is it a regular crack? A crack up to a foot long may be repairable.

But why should you consider a repair? Many people are concerned with the integrity of the windshield. They don't want to break the factory seal. Rembember, the windshield is a structural component of the car. A new windshield may leak. Possibly. If the job is done professionally, the glass shops warranty their work. They'll do the job until it is done right. So either choice is correct. Which one are you most comfortable with?

Another thing to consider is the cost. Not everyone has a zero dollar deductible. For those who have a $100, $250, $500 or higher deductible, a repair is less expensive than replacing the windshield. The glass shops warranty their work, and if the repair does not work, they usually apply the cost of the repair to the cost of the replacement. If you have a low deductible, and you still opt for the repair, you are contributing to keeping down costs. That is good because that helps keep the cost of insurance down. Remember, it is a business.

So which one is it? Repair or replace? There are many instances where you don't have choice. The location or size of the damage dictate that you must replace the windshield. But sometimes the windshield can be repaired. I have seen repairs where you can't tell the glass was previously damaged. Tip. If you are considering having the windshield repaired, cover the crack with a piece of tape and get it repaired as soon as possible. The tape keeps dirt out of the area.

How Do I Get My Broken Windshield Fixed?

2007-03-25T19:16:00.000-07:00

You are driving down the road making good time when all of a sudden BAM! you hear a sound as loud as a gunshot! You don't think you hit anything, there was nothing in the road. Then you see it. There is a two inch crack in the windshield over on the right side. Wonderful. And this month you need to get your car inspected. What are you supposed to do?

The comprehensive coverage in your automobile insurance policy will cover it. You will be required to pay your deductible, but the insurance will pay the remainder. Contact your insurance agent to make a claim and he will guide you through the process. Many insurance companies have a procedure in place with a number of glass shops where the shop will only charge the customer the deductible. They bill the insurance company for the rest. The insurance will reimburse you for the amount over the deductible if you have paid in full.

Many glass shops are now mobile and they will come to you. They can do the job at your home or they may even do it at your workplace. Of course you normally would be able to drop your vehicle off at the glass shop. But who do you choose to do the job?Many of the glass shops in your area can do it both efficiently and professionally. Ask your insurance agent for guidance. Maybe you've had to have your windshield replaced before. Were you satisfied with the work? Who have your friends and neighbors used in the past? Were they satisfied?

Now may be a time to review the deductibles on your policy. Did you have a $500 deductible and you got stuck paying for the whole windshield? Ouch! How much more would the insurance be for a lower deductible? Check with your agent. You may be surprised. Now that you've had some experience, would it be practical to change to a lower deductible? Is the deductible the same on all your vehicles? Have you recently purchased a new car and continued the same coverage you had on the old car? Or have you recently paid off the loan on your car and deleted coverages? Have your agent run the numbers for you. He'll be happy to compare the cost of different deductibles for you.

Homeowners Insurance: Deductibles and Home Maintenance

2006-05-07T16:03:00.000-07:00

What deductible should you carry on your Homeowners Insurance? What does home maintenance have to do with the deductible on your Homeowners Insurance? Home maintenance, the deductible on your Homeowners Insurance and the price you pay for that Homeowners Insurance all go hand in hand.

Years ago, people would only use their Homeowners Insurance in the event of a catastrophic loss: their house burned down, or burglars stole all their belongings. It was a common rule of thumb that homeowners would use their insurance on the average, two point something times during their lifetime. If someone backed into the side of the garage on the way to work, they would take care of it and not submit a claim. Because of that, insurance companies did not penalize homeowners for using their insurance.

Nowadays that mindset is changing. Many people feel that since they are paying for the insurance, if the occasion arises, they are going to submit a claim. If they are only going to get five dollars after the deductible, they are still going to make the claim. The insurance companies are tracking these losses. Now they are starting to increase the cost of insurance for those people that are making numerous claims, and they are even nonrenewing policies for homeowners who have multiple claims. The insurance companies feel that homeowners should not be using their insurance for home maintenance.

Insurance companies are also phasing out lower deductibles. Some companies no longer have a $100 deductible or $250 deductible. The $500 deductible could be next. Insurance companies are now adding a 1% or 2% deductible - 1% or 2% of the dwelling amount - the amount you are insuring your house for. If you insure your home for $500,000, a one percent deductible would be five thousand dollars. A two percent deductible on that same house would be ten thousand dollars! You can see that the insurance companies are trying to do away with small claims.

That is not necessarily a bad thing. Some insurance companies will charge for a deductible lower than the standard deductible. On the other hand, they will discount for a deductible higher than the standard deductible. In this age of rising costs, taking a higher deductible might make good sense. I strongly urge you to discuss the deductible options your insurance company has available with your insurance agent.

So what does this have to do with Home Maintenance? If you come home from work some night and discover your house filled with smoke, you may have suffered a "puff back". Your clogged furnace exhaust just filled your house with oily smoke instead of going up the chimney. Now you have to have your walls and furniture cleaned. Maybe your clothes have been smoke damaged. You probably could have prevented this disaster by having your furnace cleaned and serviced.

Maintaining your home could prevent a number of costly claims. Have your furnace cleaned and serviced. Replace worn shingles on your roof. Replace the hoses on your washing machine. You may prevent claims, avoid large out of pocket expenses, and afford a higher deductible which could in turn lower the cost of your homeowners insurance.

Do I Really Need Renters Insurance?

2006-04-30T07:52:00.000-07:00

A Renters Insurance Policy is an inexpensive way to protect your personal belongings and your personal liability. Your belongings are protected against fire and theft, and they are covered anywhere in the world.

Say you went out to dinner and left your expensive leather jacket in the car. When you got back from dinner you discovered that someone had broken into your car and stolen your leather jacket. Not to worry. You are covered, minus your deductible. It is advisable to carry a small deductible because the differences in premium for the different deductible options are generally small, and small losses would be covered.

So how much coverage should you purchase? Everybody is different so coverage varies person to person. The big question is how much is all your "stuff" worth? You don't want to overinsure, but you shouldn't underinsure either. First look at your big ticket items: your furniture - the bedroom set, the dining room and the living room. Home entertainment may be another expensive item: your tv, your stereo, your vcr, your dvd player. How much did all your dvds cost? Your cds? Your tapes? Your records? (Come on, I still have mine!) Your computer - hardware and software? Cameras? Sports equipment - golf clubs, skis, bicycles, firearms. And don't forget your clothes. If your apartment burns down, you will be starting from scratch. Do you have lots of expensive suits, or are you a casual jeans person? Don't sell yourself short - a pair of Levis is not cheap! And don't forget your underwear. Are your drawers full of Victoria's Secret items, or do you just get the department store stuff?

The more documentation you have in the case of a loss the better. The insurance company is not going to nickel and dime you, but they are not going to give you carte blanche either. You really should have some kind of inventory list. Model names and serial numbers are especially helpful. Pictures and video tapes help as well. Tape an entire room focusing on individual items. Duplicate your lists or tapes and store them in a separate location - your safety deposit box, your friend or relative across town. I suggest you look into a replacement cost endorsement. For a modest extra premium, in the case of a loss, your items won't be depreciated - they will be replaced at today's cost.

Another benefit of having a renters policy is that it may make your car insurance cheaper. Many insurance companies will give you a discount if you have multiple types of insurance policies with them. Many landlords also require their tenants to have a renters liability policy.

In summation, a Renters Insurance Policy provides coverage for your personal belongings anywhere in the world. It gives you personal liability coverage and it may make your other insurance less expensive. Consult your insurance agent about how much coverage you need.

Term Or Whole Life Insurance - Which One Is Best For Me?

2006-04-29T07:31:00.000-07:00

There are basically two kinds of life insurance: Term Life Insurance and Whole Life Insurance. Term life insurance insures your life for a term: 5 years, 10 years, 20 years, while Whole Life insures your life for, you guessed it, your whole life. Term life insurance is generally less expensive because it only insures your life for a term and only pays out in the event of your death. Whole life is more expensive because the premium charged is for your whole life and it offers more benefits than just the single death benefit paid upon your demise.

Term life insurance is like renting or leasing. You insure your life for a term, you pay the premium and if you die during that term, someone receives the money you insured your life for. If you manage to survive that term, the insurance company keeps all your money and the contract is ended. Now that is not a bad thing. During that time you had the peace of mind knowing that if you had died, you were taking care of your wife, your kids, someone important to you. All for a modest expense. Most policies are renewable without your having to reprove your insurability, though now that you are older, the premium will have increased. As you get into your later years, terms you are eligible for decrease because your life expectancy has also decreased. Many people purchase term life insurance for a vulnerable period: they want to be insured until the kids get out of college, or until the house mortgage is paid off. If you are looking to purchase life insurance for the long haul, I suggest you take a look at a whole life policy.

Whole life insurance insures your life for your lifetime. Premiums are higher than term insurance, but your rate is locked in at the age you start the policy. The premium does not go up, while the rate increases with every renewal of term insurance. If you insured your whole life with term policies you would end up paying more in the long run because of the increasing premiums while the whole life policy charges a continuous steady rate.

Whole life insurance offers more benefits than the one time death benefit of term insurance. The insurance company is investing your premiums and your policy is building up cash value. The company also pays out dividends and that also increases the value of your policy. Over time you could use these dividends to pay for a portion of or even all of the premium of your life insurance policy. You can use your whole life insurance policy as collateral, and you can even take a loan from your policy! You can also surrender your policy and use the proceeds to supplement your retirement. Over time the accumulated dividends and cash value of the policy could add up to a substantial nest egg!

When purchasing life insurance you have to consider what your goals are. Are you going to use this to supplement your retirement, or do you just want to make sure the house is paid for if you die? How much coverage can you comfortably afford? Discuss all these things with your insurance agent. Have him show you illustrations of what a whole life policy could do for you and make an informed decision.

Physical Damage Coverage For My Car On My Auto Policy

2006-04-26T18:58:00.000-07:00

There are two physical damage coverages for your car on an auto policy: collision coverage which covers crashes, and comprehensive coverage, also known as other than collision, which covers fire, theft, vandalism and glass breakage. Both of these coverages come with a deductible - what you have to pay, before the insurance pays. The higher the deductible the less the cost of insurance because you are retaining more of the risk. Many other factors determine the cost of insurance: what kind of car is it?, how old is the car?, how old is the driver?, is the driver a man or a woman?, and how is the driver's driving record?
Deductibles vary with the state you live in and which insurance company, but they generally range from no deductible (0) to $2000. Other deductibles are: $100, $250, $500 and $1000. When you are shopping for insurance, I urge you to compare the numbers. The cost between deductibles on comprehensive are generally lower than those on collision. When buying a new car, many people come in with a mind set on a $500 deductible. Most lienholders or finance companies allow you a maximum deductible of $500, so that is usually the cheapest insurance. So now you are driving down the road in your new car with a $500 deductible, and a rock shoots up shattering your windshield. It is covered under your comprehensive coverage, but you have to pay the first five hundred dollars and the average windshield runs between three to five hundred dollars. For a little more money, you could have purchased comprehensive with a $100 deductible and you would only have to pay the first one hundred dollars.
Have your agent run the numbers for different deductibles on both comprehensive and collision. If the numbers look good at one deductible, look at the next lower level. Insurance is not meant to be one size fits all. I like to say insurance is a la carte. It should be a custom fit between what you can comfortably afford and what you are comfortable with risking.

Why Do I Need Medical Coverage On My Car Insurance Policy?

2006-04-25T19:09:00.001-07:00

So many times, people don't understand the need for medical coverage on their auto insurance policy. "Why do I need medical coverage?", they ask. "I have medical insurance." I'm glad they have medical insurance, but what about their passengers? Do they have medical insurance?
The medical coverage on your auto insurance provides medical coverage for both you, the driver, and each one of your passengers. It is a very cost effective way to pay for that ambulance ride to the hospital and to pay for the doctor exam. Many people don't realize that their medical insurance probably won't pay anything until the medical coverage from the car policy is exhausted!
Years back, a celebrated author in his get rich quick book advised us to minimize the medical coverage on our car insurance, or to drop it entirely. I would advise you to maximize it! Many health plans do not cover auto accidents until after the first fifty thousand dollars. My own plan does that, but for a modest extra $15 every month, it will pay after the first five thousand. No thank you! I'll pay the extra $15 to raise the medical coverage on my auto policy to $50,000, and spend that extra monthly $15 on something I'll enjoy.
Check it out. Have your insurance agent run the numbers, and I'm sure you'll be surprised.

Homeowners Insurance - What Is Guaranteed Replacement Cost?

2006-04-23T16:31:00.000-07:00

Many times when you apply for a homeowners loan, the bank requires you to insure the home for the entire amount of the loan. The value of the land, which may be substantial, is included in the purchase price, and in the event of a catastrophe, the land generally is not going anywhere. To get around that, insurance companies came up with a guaranteed replacement cost policy.
If you reasonably insured your house for $100,000, and after totally burning down it cost $150,000 to rebuild it, the insurance company would be on the hook for the entire $150,000. This relieved the homeowner of the responsibility of insuring his home for the entire amount of the loan if it exceeded the replacement cost of his home.
Due to several recent natural disasters, many insurance companies have discontinued their guaranteed replacement cost policies. Some will provide a percentage of the policy coverage amount at no extra cost, but many will only pay up to the policy limits to rebuild your home in the case of a loss. I strongly urge you to check with your insurance company to determine just what your policy covers.

How Much Should I Insure My House For?

2006-04-23T16:08:00.000-07:00

Homeowners insurance, otherwise known as fire insurance or hazard insurance is insurance for your house. It protects your house from many dangers, such as fire or wind damage, as well as protecting your contents or belongings from fire, theft, or other damage. Homeowners insurance also provides you and your family with personal liability coverage. So when your son bangs his bike into your neighbor's brand new car, you are protected.
But how much should you insure your home for? And who determines that?
Your home will generally have three different values: (1) how much you are taxed on, (2) how much you can sell it for, and (3) how much it will cost to rebuild it. These values are never the same. A driving factor in the value of your house is its location. My good friend built a waterfront vacation home on Lake Winnipesaukee in New Hampshire for around $300,000. The home is currently valued at over $1.5 million! Location, location, location....
Another factor in determine the value of your home is how much land is included in the property. Obviously 10 acres is probably going to worth more than acre, but what kind of land is it? Are 5 acres undevelopable wetlands? And again, you guessed it, where is it located?
When you first purchase a home, the bank is going to want you to insure the house for the amount of your loan. Many times, they won't even take into account the value of the land, which will still be there even if the house completely burns down. The insurance company wants to insure your house for the replacement cost. They do not want to underinsure you, nor do they want to overinsure you.
To determine the value of your house, many insurance companies have developed cost estimate tools. They generally need to know how old the building is, how many finished square feet it contains, how many stories, what type of roof (gable, gambrel, etc), what type of construction (frame, masonry), what type of siding (vinyl, aluminum, clapboards), etc. The more detailed the questions, the more accurate the estimate will be. Is your kitchen a basic kitchen, or does it have custom cabinets, granite countertops and a ceramic tile floor?
The insurance company will also accept a replacement cost estimate from a licensed contractor in the area. Many times the bottom line on how much you need to insure your home for depends upon what the bank will accept. It is very important that you talk with both your bank and your insurance agent. It would be foolish to overinsure your house and pay for coverage you will never receive, but it would be just as bad to underinsure and save a little money and risk a large shortfall in the event of a catastrophe.

Welcome to the InsurancePlus Weblog

2006-01-28T19:00:00.000-08:00

This weblog is about providing answers to your questions on auto, life, and home insurance. I have over a decade of experience in selling auto, life and homeowner insurance policies. I welcome your insurance questions and will try to provide you with accurate and timely responses.