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How Much Coverage is Enough for Auto, Home and/or Life insurance?

Auto Insurance

Auto insurance blends several types of coverage into one policy. Typically, your policy will include some combination of comprehensive, collision, medical, liability and uninsured motorist coverage. So how much coverage do you need? It depends on your specific situation.

Liability pays for the damage you cause to others if your car is involved in an accident. It also protects you from being wiped out financially if you are sued following an accident. The greater your assets, the more you stand to lose. If you have substantial financial resources, you may need liability coverage that exceeds the coverage that you’ll get from an auto insurance policy. In that case, a Personal Umbrella can provide the extra liability protection you need.

Collision covers damage to your car from an accident. We can help you decide whether or not to carry collision coverage by balancing the cost of collision insurance with the value of your car. It might not be worth paying $200 a year for collision insurance on a car that’s worth only $1,000. But if the car is worth $10,000, you probably want this coverage.

Comprehensive coverage pays for your car if it is stolen, vandalized or damaged in some way other than in a collision.

Medical coverage provides for medical expenses to you and your passengers that are the result of an accident. The way you use your car may make a difference in the amount of medical coverage you need. For example, we might suggest more coverage for a parent who regularly takes a carload of kids to soccer practice than for a driver who expects to drive mostly alone.

Keep in mind that many states require certain minimum levels of coverage. We’d be happy to talk with you about these and other factors

Home Insurance

The cost to rebuild your home is its replacement value. This can be very different from the estimated market value or actual purchase price. In most cases, it costs more to rebuild the home you own than to buy a new one. This is an important insight into why your Dwelling (Coverage A) limit is so important.

It is critical that you provide us with accurate, updated information about your home and contents. If your dwelling limit accurately reflects your home’s true replacement cost, some companies will pay more than the limit if a covered loss is greater than the limit on your policy. Ask us if Home Replacement Guarantee or Extended Dwelling Coverage, is available in your state.

Once a review of your home and possessions indicates you are properly insured, it’s a good idea to reexamine your coverages and limits from time to time, especially whenever you make additions or improvements. We’ll work with you to estimate the replacement cost for your home and to adjust your policy limits from time to time as needed.

Be Sure You Have Enough Insurance

Here are some steps you can take to reduce the danger of being seriously underinsured:

  • Call us. If you have questions or concerns about the limits in your policy, ask us to show you how those amounts were calculated. This will also give you an opportunity to make us aware of any overlooked information.
  • Read your policy. Certain types of property, such as jewelry, and certain perils, such as earthquake or flood, are better insured separately. Knowing what is covered and for how much will help you insure properly. If there is anything in your policy you don’t understand, contact your agent and ask for an explanation.
  • At each annual renewal of your policy, you receive a new Policy Declarations page showing limits of coverage and optional coverages. Review this information. If you do any significant remodeling or add a family room, extra bedroom or bathroom, etc., tell us about these changes so your coverage limits can be adjusted to cover the improvement.
  • Consider carefully whether your policy provides all the protection you need. Does it provide coverage for extra costs resulting from building code changes? Does it automatically increase coverage limits annually to keep pace with inflation? Does it provide additional funds if the cost of rebuilding your home exceeds the policy limits?
  • Find out whether your insurance company will stand behind agreed upon repairs after a claim. Some companies are willing to put this guarantee in writing.
  • Does your policy include replacement cost coverage for contents (clothing, furniture, appliances, and other personal property inside your home)? If not, you can add it by endorsement. The cost is small, the protection valuable. Replacement Cost Coverage pays for losses to your possessions at the cost of brand new items. Without this option, a covered loss to your personal possessions would be depreciated by their age and condition, reducing the size of your claim settlement.
  • If you have an art collection, antique furniture, jewelry, or other valuable possessions, talk to your agent about supplemental coverages, such as fine arts or scheduled property endorsements, to adequately protect your investment in these items. The cost is modest for the extra protection, and often the deductible is waived.
  • Consider whether you should have more coverage for personal property (contents) than your policy provides. Personal property coverage is usually 70% of the coverage limit for the structure. Your limit may be lower than 70%. Supplemental protection is available for a small additional premium.
  • Prepare an inventory of personal property items, update it periodically, and keep it in a safe place outside your home, such as a safe deposit box at your bank. It will save you hours of time trying to list everything damaged or destroyed if you need to make a claim. It will also help ensure you don’t forget some items. We can advise you on ways to simplify the job of preparing a personal property inventory such as videotaping each room with descriptive information on the sound track.
  • Besides making sure you have enough protection to cover possible damage to your own home and contents, you should also evaluate your exposure to liability risks. These result from damage to the property of another, or injury to a person, not a member of your household, for which you can be responsible. In recent years it’s become common for homeowners to be sued for injuries or damages to others, even when there is no evidence of negligence by the homeowner. The reality today is if you have any appreciable assets, you are exposed to the risk of being sued. Even if you ultimately prevail in court, your legal fees and the months or years of worry and uncertainty can be a terrible burden on you and your family.
  • The Personal Liability coverage provided by your Homeowners Policy usually provides a limit of $100,000 or $300,000. We recommend increasing this protection with a personal umbrella policy. Not only will it increase your personal liability, but also your auto liability. Limits are available from $1 million to $10 million and beyond. The cost of this coverage is usually very reasonable.

Life Insurance

Life insurance is a crucial step in planning for your future. Not only can life insurance fulfill promises made to your family if you are no longer around, there are several life insurance policies that provide benefits while you are living.

Determining Your Need
The need for life insurance is dependent on your own personal and financial needs. We can assist you in determining what type and amount of life insurance is appropriate for you. Generally, you should consider life insurance if:

  • You have a spouse
  • You have dependent children
  • You have an aging parent or a physically challenged relative who depends on you for support
  • Your retirement savings are not enough to insure your spouse’s future against a rising cost of living
  • You have a sizable estate
  • You own a business

There are benefits of life insurance other than providing for your loved ones in case something happens to you:

  • The cash value earned and borrowed from a permanent life insurance policy can be used to help with large expenses, such as a college education or down payment on a home.
  • The growth of a cash-value policy is tax-deferred — you do not pay taxes on the cash value accumulation until you withdraw funds from the policy.
  • Life insurance can be used to cover funeral expenses and pay estate taxes — consult your tax advisor agent for more information.

Life Changes – So Should Your Policy

Your need for life insurance is dependent on your personal and financial needs. As your life changes, your life insurance coverage may need to change as well to adapt to your current needs. Some life changes that may require a policy “tune-up” include:

  • You recently married or divorced
  • You have a new child or grandchild
  • Your health or your spouse’s health has deteriorated
  • You are providing care or financial assistance to a parent
  • Your child or grandchild requires assistance or long-term care
  • You recently purchased a new home
  • You are planning for a child or grandchild’s education
  • You are concerned about retirement income
  • You have refinanced your home mortgage in the past six months
  • You or your spouse recently received an inheritance

Nine Easy Ways to Frustrate Car Thieves

There’s no foolproof way to safeguard against car theft. But many no-cost deterrents exist for protecting your vehicle. A thief’s greatest enemy is time. The more difficult your car is to steal, the longer it takes to be stolen. The longer it takes, the more likely the thief will move on to an easier target. Here are nine ways to frustrate car thieves:

  1. Park with the wheels turned toward the curb. Turn them even when parking in driveways and parking lots. This makes your vehicle difficult to tow.
  2. Park in well-lighted areas. More than 50 percent of vehicle thefts occur at night.
  3. Use your garage and lock both the vehicle and the garage.
  4. Keep your vehicle registration in your purse or wallet and file your title at home. If a thief has these two documents, your car will be easier to sell.
  5. Park in attended lots. Thieves don’t like witnesses.
  6. Activate anti-theft devices your car is equipped with.
  7. Close all windows, lock all doors and take the keys with you. One out of four stolen cars has its keys inside.
  8. Always turn off your engine and take your keys with you during “quick stops” at convenience stores, gas stations, ATMs, dry cleaners, etc.
  9. Put all packages and personal items out of sight. Items left in the open make your vehicle a more desirable target.

Disaster Planning Made Simple

For many people, a little preparation could make a big difference in coping with the aftermath of a severe earthquake or storm. Disaster-planning experts say people should be prepared to go without power and most other basic services for up to 72 hours. That means no electricity, water, fire fighters or police.

With a few simple additions, the average household already has many of the resources needed to deal with a disaster. Here are a few suggestions and hints on how best to use what’s already on hand.

Water. The water heater (30-40 gallons) should contain enough water to last a four-person household four days. (Turn off power before draining and be careful of sediments that can accumulate at the bottom of the tank.) Ice cubes in the freezer and liquid from canned food can be used. If you’d rather not store extra bottles of water, consider keeping purification tablets on hand. Household chlorine bleach will disinfect water, too. Use one-eighth of a teaspoon per gallon of water and let stand for 30 minutes before drinking. Do not use bleach with added soaps or fragrances.

Food. Most houses have ample food for several days. Use food in the refrigerator first, then the freezer. Frozen food will keep up to three days in an unopened freezer. Keeping a few extra canned goods in the back of the cupboard is always smart.

First Aid. Most homes have the necessary items to handle routine accidents. A basic first-aid kit and a book on first aid should be kept in a central location. It’s a good idea to take a first-aid and CPR course from the Red Cross.

Fire Extinguishers. Have one or more fire extinguishers and learn how to use them. Have the extinguisher serviced according to the manufacturer’s instructions.

Other essentials. Identify your home’s utility shut-off valves and learn how to turn them off. Have at least one flashlight and a battery-powered radio. Make an evacuation plan so all family members know several escape routes and where to meet outside.

Quick Tips

Rollover accidents are twice as likely in a sport utility vehicle compared to all other types of vehicles, according to government statistics. And the likelihood of being killed in a rollover accident is 40 times greater if the occupant is ejected. Two solutions: avoid sharp turns, especially at high speeds and always buckle your seat belt.

You are safe from a lightning strike in a car with a solid metal top and the windows and doors shut if you are not touching a metal part of the car. The lightning charge would travel over the car’s metal surfaces to the ground (it’s not the rubber tires that protect you). It could jump through an open window, though. Don’t stand right outside a car or lean on it in a storm. (Source: UC Berkeley Wellness Letter.)

Try this: Sit down with a pad and paper and make a list from memory of everything you own and approximately how much you paid for it. This is what many homeowners must do when their homes are destroyed by fire or storm. You might be surprised by how much you own. You also might be surprised you how much you overlook. For peace of mind, make a thorough list and keep it in a safe place away from home. Photographs or video tapes can also be helpful if there’s a loss.

Rear-enders are among the most common auto accidents. To keep a safe distance, the National Safety Council recommends the two-second rule. Watch the vehicle in front of you as it passes a stationary object, such as a light pole or road sign. Count “one-thousand-and-one, one-thousand-and-two.” Slow down if you pass the same object before you count two seconds. Heavy traffic can make this difficult, but it’s worth using whenever possible.

Links to Insurance Related Organizations

Insurance Information Institute
A non-profit group sponsored by the insurance industry to provide general information about insurance. This is an excellent resource for unbiased information. Order publications at the web site.

Highway Loss Data Institute
Information on car theft, collision and injury listed by car make, model and year. Also contains extensive highway safety tips and information.

Insurance Institute for Highway Safety
Excellent information and sobering statistics on automobile safety.

National Flood Insurance Program Information
Includes a wealth of information on how to insure homes against flooding. This site is the official web page for the Federal Emergency Management Agency.

The Life and Health Insurance Foundation for Education
The Life and Health Insurance Foundation for Education (LIFE) is a non-profit organization designed to address the public’s growing need for information and education on life, health, and disability insurance. LIFE also seeks to remind people of the important role agents perform in helping families, businesses, and individuals find the insurance products that best fit their needs.