How much is an hour of your time worth? Would you believe it could be worth thousands of dollars? Millions of home-owner’s policies are issued in conjunction with the mountain of paperwork associated with new mortgages, and it is easy for the majority of first time home buyers to overlook their insurance policies until it is too late. It is only after a catastrophic event, such as a hail storm or flood, that people are forced to pay attention to the conditions of their insurance policy. You should take an hour of time to review your entire policy annually, and discuss any concerns you may have with your agent. Pay specific attention to your exclusions section, and your declarations page. The Policy Declarations page is a quick snapshot of the most important policy details, which are simplified for better understanding below.
Your policy limits are the maximum amount that your insurance company will pay out in the event of a total loss, such as a tornado or fire. Policy limits are set by you or your mortgage company when the policy is first taken out, but upon renewal most companies will use your current county’s appraisal amount. You should make sure that your policy limits are set at your home value plus at least 15%. If the value of your home is $100,000 then your policy limit should be at least $115,000 for your dwelling. It generally costs 15-20% more to replace, than to build new. What are your policy limits?
Do you have an RCV or ACV policy? The difference between these two policies can amount to several thousands of dollars out of pocket. The Replacement Cost Value (RCV) is the value of replacing your damaged items with current market rates. The insurance company will then depreciate these items based on their age and compare them based on their useful life expectancy. For example: a roof shingle that has a thirty year warranty and is ten years old will have a depreciation ratio of 10/30. The formulated depreciation amount is subtracted from the RCV to reach the Actual Cash Value (ACV). If you have a RCV policy, the depreciation that is retained by the insurance company will be issued to you after the replacement of your damaged items is complete. If you have an ACV policy the depreciation that is retained by the insurance company is non-recoverable and you will not be issued this amount. The benefit of an ACV policy is a lower monthly premium payment, which makes it attractive for rental properties and non living structures such as barns. You should discuss the pros and cons of each type of policy with your agent to determine which is best for your situation.
These are very basic insurance concepts. To have more detailed policy and claim questions answered you can visit http://www.hailandwind.com/ and submit a question to the forum. You can also acquire more detailed information from your state’s Department of Insurance website, and you can call your insurance agent if you need to make any changes. He or she will be happy to take your call. It only takes about an hour to read your insurance policy, and you should read it every time it is renewed. Make sure you know what is excluded and endorsed. Find out if you can afford your deductible in the case of a claim. Match your policy limits to the value of your property, plus 15-20%, and determine which policy you need, ACV or RCV. One hour of your time could save you thousands!
Does your insurance agent speak English? You might think so-until you get a good look at your auto insurance policy! It can be hard to pick the English out of the muddle of Insurance-ese, Legal-ese and Big-Word-ese that jumbles up most policies and make it impossible for the average driver to understand without a dictionary in one hand and a thesaurus in the other!
Having a good grip on auto insurance terminology is a vital part of any successful insurance shopping endeavor. The question is, how much auto insurance terminology do you know?
1. At Fault – Believe it or not, this one isn’t quite as simple as it sounds. There are two variations on “At Fault” in the auto insurance dictionary. The person considered to be “at fault” in an accident is the one who caused it in the first place, and “at fault” insurance (as opposed to no-fault insurance) means that the person who was “at fault” is going to be paying all of the bills.
2. Bodily Injury Liability – This is the part of your insurance coverage that makes sure you’re not stuck with emergency room bills, ICU bills, outpatient bills and rehabilitative therapy expenses for someone else after you take a slide on a slick city street in the middle of winter and run head first into their vehicle.
3. Comprehensive Coverage – Regardless of what your personal religious beliefs happen to be, there’s no denying that “Acts of God” can do horrible things to your vehicle. When Mother Nature is the only one to blame for the damages to your car, your comprehensive auto insurance coverage will step in and pick up the bill.
4. Collision Coverage – Your liability insurance might pick up the tab for the other person’s repairs after you’ve been in an accident, but it’s not going to do anything about yours. That’s why you need to make sure you’re carrying collision coverage. Collision will get you back on the road after you’ve been in an accident or total your car and cut you a check so you’re not left for weeks without wheels trying to come up with the money to make it happen.
5. Continuously Insured – This is one of those auto insurance terms you really have to look out for, because your insurer’s definition of continuously insured and yours may be a lot different. Most of us don’t think much of it if we’re late with a payment and our coverage lapses a few days, but your insurance company isn’t going to be impressed. Continuously insured means continuously insured-no exceptions.
6. Deductible – This is what you owe them each time you file an auto insurance claim for the privilege of having them pick up the tab. Think of it as the five bucks you chip in toward dinner, only instead of single digits it hits double or triple.
7. Garaging Location – Where you park your car. The phrasing on this is a little misleading-it doesn’t matter whether you have a garage or not.
8. Limit – The maximum amount your insurer is going to pay out for your auto insurance claims. This will usually be separated on a “per person” and “per incident” basis.
9. No Fault – With no fault car insurance it doesn’t matter whodunit. Your auto insurance is going to take care of you, and theirs is going to take care of them. (But only the driver actually at fault is going to watch their insurance rates go up.)
10. Premium – The amount of money you pay your insurer each month for the privilege of being insured.
11. Primary Use – What you use your car for MOST of the time. No, they’re not being nosy. They’re just checking to make sure you’re not a traveling salesman who spends forty hours a week on the road. (Relative risk and all that-business use usually requires a commercial policy.)
12. Uninsured/Underinsured Motorist Coverage – Not everyone has the good sense to stay continuously covered by an auto insurance policy. If you have the bad luck to run into one of these drivers on the road you could spend years in court trying to get the money for your repairs. Uninsured motorist coverage saves you the trouble-your insurance company picks up the tab. You can figure the rest out later.
This content was originally published here.