Picture
In this day and age, identity theft seems to be growing into a career. One incredible statistic that should stick firmly into your mind is that up to $230 BILLION are stolen each year world-wide as a result of identity theft.  Did you know that we have just over 7 billion people living in the world?  And you know very well that there aren't that many billionaires out there!  Has it ever happened to you?  


I can say that I am one of the 7 billion people in the world that have fallen victim to identity theft, and this just happened to me a couple of days ago.  The first question I asked myself was, where have I made my last purchases?  I had not purchased anything on the internet with my card in the past month.  My wife is the one that does the shopping so the only times I ever use my card are when I get gas and once in a while if I am picking up a lunch or dinner.  It's hard to understand how someone could steal your credit card information when you use secured payment systems at stores and on the internet.  But, apparently someone out there is very sneaky and intelligent.  Fortunately for my wife and I, we have fraud protection through our bank and we also have Identity Theft Protection through our Renters Insurance Policy.  This brings me to the meat and potatoes of today's discussion, insuring yourself for identity theft.


Now, many individuals that I have sold insurance policies to were not aware of identity theft protection being available through a homeowners insurance policy.  The truth is that many carriers don't push hard to promote Identity Theft as a feature product because homeowners policies are generally built around protection of the home and it's contents and protection for liability.  What adding Identity Theft Protection does is add protection for your bank account and social security!


You may be wondering, how much does Identity Theft Protection add to the premium of a homeowners policy?  Well, some companies include identity theft protection in their homeowner policy bundles.  For some of the companies that don't bundle this product, you are looking at approximately $25 per year for $15,000 of protection at an average of $250 for the deductible.  But, getting Identity Theft Protection through your homeowners policy is just one way to do it.  Other avenues of fraud protection can be through your bank, and through reputable protection services such as LifeLock


So, my message for today is, take your identity seriously and check your homeowners policy, check with your bank, and consider getting additional protection.  It can happen to you, and you don't want to learn the hard way.

 
Picture
The following information is provided by a company represented by Acosta Insurance Agency. Erie Insurance.  A top 10 JD Power and Associates insurance company.

Protecting your family should be a top priority on your to do list.  One of the things a homeowners policy does is give you financial security by protecting one of your biggest assets, your home.  A homeowners policy provides you with protection for your dwelling as well as protection for your liability.  Today, I am going to go over the following:

-What is generally covered under a homeowners policy

-What is generally NOT covered under a homeowners policy

-Definitions of homeowners policy terms

What's Covered


The basics of what is covered under a homeowners policy are the following:

- The Dwelling or Home - the actual structure of the house is covered under the homeowners policy. Anything that is  attached to the home is generally considered park of the dwelling.  The amount of coverage in this category is generally the amount of money it takes to replace the home to what I call "blue-print" status, where the home is built to it's exact measurements and components.

- Other Structures - Other structures would include you garage, a pool or utility shed, a pole barn, a swimming pool, or any other structure that is located outside of your home that is considered a part of your residence.  The amount of coverage in this category is generally at a minimum of 10% the dollar amount of your dwelling coverage.  So, for example, if you have $100,000 of dwelling coverage then you would automatically have $10,000 of other structures coverage.  NOTE: Take a look at your homeowners policy, this is an often overlooked area of the homeowners policy so be sure you have enough coverage here.

- Personal Property - Personal property coverage is another coverage that isn't always clearly defined.  When you look at your personal property coverage, you must first consider all of the items you own, such as but not limited to; clothing, appliances, entertainment equipment, movies, video games, music, antiques, dishes, utensils, furniture, cleaning supplies, bedding,..etc.  Understand that each company has a different philosophy when it comes to personal property.  Most of the time, things such as antiques and guns are only covered for up to $2,500 dollars if they are misplaced, stolen, or lost.  If the entire home is destroyed and all of your belongings are destroyed with it, you must have some idea of what you have owned.  Everything can be replaced up to the amount of your personal property coverage.  Generally, personal property coverage is at minimum 60% of your dwelling coverage.  Make sure you take a good look around your home and make sure you check your insurance policy.  If you feel like you have more in value than what your insurance policy will pay, you may want to consider increasing your dwelling coverage amount on your policy.

- Loss of Use - This type of coverage will protect your living status when your home is uninhabitable.  The extra cost of living while the house is being restored will be paid for by your insurance company for a certain amount of days in which many insurance companies defer.  With some of our insurance companies, they will cover your extra living expenses for up to 24 months or however long it takes for your home to be fully restored.

- Liability - One thing many people don't know about their insurance policy is that anything you do that becomes a loss of your fault is covered under certain circumstances through your homeowners insurance policy.  One thing that would be covered is if you are fully sober and someone were to become injured as a result of your actions, your insurance company will cover their bodily damage through personal liability coverage.  Another, similar coverage is Medical Payments. Medical Payments coverage will cover the bodily damage to an individual who is injured on your residence.  This is because your homeowners insurance policy wants to cover you for anything you may be held liable for, even if your actions did not necessarily cause the injury.  Liability coverage is generally at a minimum of $100,000 or a maximum of $500,000 depending on what you decide when you meet with your agent.  Medical Payments coverage is generally at a minimum of $1,000 or a maximum of $5,000.  Any coverage that may be desired above and beyond your maximum liability must be covered under what is called a Personal Catastrophe Policy (I'll go into detail on that some other day).

Now that we have gone through what is covered, let's talk about what is generally NOT covered by your homeowners insurance policy. NOTE: most of what is not covered can be covered through endorsements or through additional specialty policies.

What's NOT Covered


- Flood - As most of us have witnessed by watching the news, flood damage is a very serious issue.  Unfortunately, weather related floods are not automatically covered by your homeowners policies and cannot be directly covered under a homeowners policy.  The National Flood Insurance Program (NFIP) provides flood coverage in a natural disaster.  Because of the extensive damage floods do to homes and the number of homes they damage in a given time, insurance companies have been lifted of the responsibility of insuring them on their home.  Instead, flood programs through the states have been created and flood hazard zones have been appointed in order to decide who will be required to purchase flood insurance.  Flood insurance is not forced upon a homeowner unless they have taken out a loan through a mortgage company and they live in a flood hazard zone.  Flood insurance policies have been on the rise because of the natural disasters that have occurred each year.  So, if you have a flood hazard policy and your insurance premium has increased exponentially, you can thank Hurricane Sandy.

- Mold - Generally, mold is only covered on a limited basis if it is caused by a covered peril.  Covered perils that generally cause molding are roof leakage and sump pump water backup (this coverage must be added by endorsement).  Mold, according to many insurance companies, is considered a result of lack of housekeeping or negligence.  Based on basic guidelines, negligence is not covered by insurance companies.  So, if you want to make sure you are covered for mold, you better talk to your insurance agent.

- Earthquake - This is a peril that is provided by insurance companies but is not required.  Because it is not required for coverage, clients are not obligated to have it.  It is really a judgement call, because earthquakes are not a common occurrence in Northern Indiana, many individuals in the area I live in opt out of purchasing earthquake insurance.  

- Identity Recovery - This is a coverage that acts as a safeguard to your social security identification and your bank account.  Anyone who attempts to steal your identity or your money through your bank account, may get away with it, but your insurance companies have offered to provide you with financial protection and a means to get yourself back to your original state.  This is a coverage that is only added by endorsement.

A couple of definitions


- Actual Cash Value (ACV) - This is a value placed on your dwelling and personal property.  It is the amount needed to replace a damaged item minus depreciation of the item.  For your dwelling, when a minor partial loss occurs, actual cash value coverage will cause you to reach into your pocket and potentially pay for half of what it takes to repair your damage.

- Replacement Cost (RC) - Another value that is related to your dwelling and personal property.  It is the dollar amount needed to replace a damaged item with an item of similar kind and quality.  With this coverage, you only have to pay for your deductible, after that the insurance company will take it from there.  With replacement cost, you can breath easy knowing that everything you lost will be replaced.

I won't go into any more definitions because that can get quite lengthy.  BUT!  Make sure you review your homeowners policy and take all of this into consideration.  Sit down for 30 minutes and make a checklist of each bold point.  Check each one and make sure your insurance makes sense to you.  If not, I'm always here to answer your questions.  Simply EMAIL ME and I will respond as soon as possible.  

HAVE A NICE WEEKEND! and GO IRISH!





 
        A homeowners policy consists of many different elements.  Each element of the homeowners policy has a specific rate attached to it.  Each of the rates creates portions of the premium which in the end are summed up into the overall policy premium.  You may wonder, why does the premium fluctuate year to year.  Well, there are a number of different reasons.  Many individuals will look at an insurance policy and think of it as their premium based on their insurance history.  Unfortunately, that is not the case.  Insurance premiums are based on a variety of factors, with some of them out of your control.  Two main factors that are out of your control include: company loss ratio (premium paid vs. losses paid) and territorial risk (how often the area succumbs to natural disaster, theft, etc.).  When you get a letter in the mail stating that insurance rates for homeowners policies have increased, you should always contact your agent, but it is most likely because of these two factors.  

        Risk factors that you are in control of are not always easy to control, but they are factors that are based on you as the consumer.  People may wonder, why aren't all homeowners insurance policies the same price?  Or, why is it that I have the same type of house as my neighbor yet my insurance premium is $300 more?  Here is a list of factors that the insurance company rates for you as the individual consumer: Credit History (have you always made on time payments? are you in a lot of debt?), age (insurance premiums generally decrease as you get older), loss history (have you had any losses in the past 5 years?).  These factors play a key role in determing how much your homeowners insurance will cost you.  These three factors help to determine an insurance score, which is used to provide the insurance company with information on how to rate your insurance premium based on you as the owner of the property.

        I'm sure after reading the previous two paragraphs, you are probably ready to know how you can save money on your homeowners insurance.  And, while many of you may know some of the discounts, read the following list, you may be missing something.

Homeowners Insurance Discounts

1. Increase your policy deductible
2. Update your roof, plumbing, electric, furnace
3. Install additional safety devices (i.e. burglary system, sprinkler system)
4. Multi-policy discounts (purchase an auto policy or life insurance policy with the same company) from 25%-30% discount with some insurance companies.
5. Have great credit history (Individuals with above average credit scores get a discount)


These are the basic discounts that you will see in every insurance company.  So, if you are looking to save, don't hesitate to call your insurance agent and ask them about these discounts.  Or, you can contact me, and I will help guide you on your way to a better and less expensive insurance policy.


Read my blog tomorrow as I dig deeper into the homeowners insurance policy to give you details on the most necessary coverages and w

    Author

    Jonathan Rolon
    Personal Lines Specialist
    Acosta Insurance Agency, Inc.

    Archives

    January 2013

    Categories

    All