Understanding Insurance Policies

TIPS ON UNDERSTANDING INSURANCE POLICIES

Insurance is a necessity to protect your home, your car and your valuables.

However, there are many facts about insurance in general that people tend to overlook.

Usually if a situation arises where you need to use your insurance, you find out instantly how your policy works or doesn't work for you.

I’ve been in several situations where I’ve had to rely on my insurance policies.

That's perhaps the best way to know if the policy does work for you but knowing how it works before you need it is truly the best "policy".

Let’s explore some facts about insurance and then you can decide if your policies are working for you.

SOME FACTS ABOUT INSURANCE

These are some things that insurance may cover depending upon your policy.

HOMEOWNERS INSURANCE

• Stolen merchandise from your car (such as a video camera)
• Stolen luggage
• Packages stolen from your car while shopping (always carry your receipts on you)
• Items stolen from your kid’s dorm room at college (but probably not an off-campus apartment)
• Legal defense – when someone sues you for falling on your front steps
• Spoiled food clause – some insurance companies carry this – in the event of a "peril" such as a lightning strikes, wind storms, etc. Your power is out for 4 days and all your food spoils

CAR INSURANCE

• Pet injuries – usually up to a certain dollar value for vet bills
• Company car – if you only have 1 other car insured you may qualify for multiple car discount if you also drive a company car
• Farm vehicle bonus – if you have a vehicle (including a tractor) that you drive strictly in performing your duties on a ranch or farm
• Legal defense – if someone sues you for back injury
• Borrowing your car – auto insurance on the car driven covers the driver of the car

2O DISCOUNTS YOU CAN GET ON INSURANCE COVERAGE

There are multiple discounts available so check with your insurance agents to see which you qualify for but here are just some of the many available.

1. Good credit scores will bring down your premiums – put person with best credit score on policy first, the person with lesser score on second to get the best discount
2. Renewal discount – returning customer
3. Paying online or automatic withdrawal
4. Senior citizens
5. Alumnus of certain schools
6. Widow or widower qualify for married discounts
7. New electrical wiring on homeowners
   
8. No claims in 10 years
9. Green commuter rates on car insurance
10. Gated community
11. Hail-resistant roofs or Class 4 roofing
12. Student being a Boy Scout or a Girl Scout (car)
13. Low-risk professions like teachers, accountants or engineers (auto)  
14. Military personnel
15. Professional association membership
16. Safety devices such as anti-lock brakes, automatic seatbelts, airbags, anti-theft devices, emergency response systems, etc. (auto)
17. Safe driver – no accidents, no tickets (car)
18. Motorcycle and defensive driver classes (auto)
19. Student discounts for GPA above 3.0     
20. Insurance bundling – having multiple insurances with the same carrier

The above are just some of the many discounts available for the insured. 

Make sure you shop around for the best possible rates which are applicable to your own unique situation and insurance history. 

You can save thousands per year by employing some of the discounts available. 

INSURANCE CLAIM SCENARIO

Lots of folks are afraid to make a claim on their policies because they’re afraid they’ll be canceled.  I’ve seen it from both sides. 

We had a homeowners policy for over 20 years and had never filed one claim.  When we were on vacation, a water pipe developed a leak in an upstairs bathroom which went undiscovered for a few days.  Luckily, our daughter came by to check on the house and discovered it but not before it had done about $20,000 worth of damage to the floor and also to the downstairs. 

An agent came out to assess the damage and sprang for replacing the drywall right away but decided that he did not want to replace the carpeting, which was completely saturated.  He contracted with a carpeting repair place and ended up drying out the Berber carpeting and pad and then putting it back down.

Months later, there was a moldy smell in our downstairs and we reopened the claim.  They fought us tooth and nail having people come out to inspect it who couldn’t detect a smell.  Finally, very reluctantly, they agreed to let the same contractor who had done the drywall replacement come out and replace the carpeting.  Lo and behold, when the carpet was taken up, there was a huge area of mold growing under the carpeting and also under the bathroom tile from the prior water damage. 

All this said, we did get everything replaced.  However, a year later when we moved to another home, they refused to give us coverage and we had to go shopping for new insurance – because we had filed a large claim. 

The moral of this story is I guess sometimes you get burned on insurance claims.  But changing companies turned out to be a good thing for us. 

It should not be that submitting a legitimate claim after being a great customer all those years would turn around to bite you but – it happens. 

That being said, filing multiple claims is always a bad idea – especially on homeowners insurance.  You want to weigh the value of something before you make a claim.  In the case of the water damage, however, we had no choice. 

INSURANCE POLICY TIPS AND TRICKS

If you are shopping for a car, always investigate before you buy; find out what the best cars are to insure.  You'll be happier when you drive off the lot.  This extra time spent can save you thousands in car insurance premiums.  Check out the cheapest insurable cars by price comparison before you buy.

When thinking about filing a homeowner’s insurance claim, make sure that the value of the claim is worth filing.  For instance, a CD collection that’s stolen out of your car isn’t probably the best thing to claim but a $3000 computer out of a home office is something you definitely want to think about claiming. 

Also be aware that filing a claim may hurt you down the road.  In my humble opinion, it shouldn’t.  I’m not sure why filing a legitimate claim would reflect badly on you after paying in for so many years but as I said, in the long run, we ended up with better insurance and a lower rate so it was a win-win situation for us. 

If you have additional insurance tips or input, please share them here!