Oklahoma City Tornado

It is amazing the damage done by the tornado that ripped through Moore, OK. Tens of millions of dollars of damage. The loss of life. That city seems to be right in an alley where tornado’s have historically traveled. Makes me wonder if people who move there have trepidation about the likelihood of this sort of thing happening in the future. The future is here…again.

In the metro Phoenix, Arizona area we don’t face tornado’s, or much in the way of hail damage. Sometimes we have fierce winds and heavy rains. Not often but I have seen them and dealt with some of the claim aftermath.

However, we do have other types of threats from causes such as fire, water loss and burglary.

When is the last time you received your annual homeowner renewal and really looked through it? I don’t necessarily mean all the fine print from cover to cover (though even that is advisable) but rather at least the main points of coverage information and the sections detailing what is covered and what is excluded?

Perhaps you need to let the Oklahoma loss and devastation remind you that it is worth 25 minutes of your life to take a careful look at your insurance. Understanding your coverages and policy limitations only serve to help you through the difficult process of a claim should it happen.

Minimum Auto Limits

The State of Illinois is considering raising their minimum auto insurance limits – the first such change in 24 years. Currently the state allows drivers to carry a minimum $20,000 bodily injury and $15,000 for property damage.

That means if someone hits your vehicle and you become injured the insurance will only pay out up to $20,000. Your vehicle damages will only be covered up to $15,000. Those limits may work for some claims but certainly not all, leaving some victims in a financial bind simply because someone else chose to cover low limits.

The new limits will raise the BI to between $25,000 – $50,000, depending if one person injured or two or more. The increase in premium is expected to be around $75 for the typical consumer.

Perhaps you are wondering then what Arizona’s minimum auto insurance coverage limits are? Bodily injury is $15,000 per person up to $30,000 and property damage is $10,000. Those are woefully low and an embarrassment to our state. Low limits like these put innocent people at personal and financial risk.

I hope at some point soon this issue will be taken up by someone in the Arizona legislature and the responsible thing done.

Insurance and the professional athlete

Many kids grow up dreaming of playing professional baseball, basketball and football (sorry hockey). The odds are so small however. Even the best athletes can run into injuries or even greater competition and never make it.

Peyton Manning is one of the lucky ones. He recently signed a contract with the Denver Broncos for $20,000,000 per season for 2013 and 2014. And in reality it probably is a bargain for Denver as their team will likely continue to compete for a Super Bowl as long as Manning is behind center.

As part of his contract Manning and the Broncos also agreed to add insurance to his contract that would wipe his salary off the books if he reinjures his neck. Ironically, the insurance policy does not cover the parties if he is injured for any other reason, just the neck.

In 2012, Manning threw for over 4,600 yards for 37 touchdowns and 11 interceptions.

I was unable to determine how much this insurance policy cost but it is merely the cost of doing business in professional sports.

A few things your homeowner insurance does NOT cover

As a homeowner you expect your insurance policy to rebuild your home if destroyed by fire or damaged in a claim. While you can always ask your agent periodically (every couple years) to do a rebuild cost estimator to help ensure your home is insured properly sometimes it is what we don’t know that could hurt us.

Are you aware that your homeowner policy does not coverage mold or earthquakes?

In one poll 40% of respondents believed their home insurance covers mold. It either does not or has limited coverage. That’s become a pretty normal standard for insurance today. The poll also found 51% believed their policy covers damages from a earthquake. Some policies offer endorsements that you can purchase and add coverage but earthquake coverage is usually not included in your homeowner policy.

What about renters insurance?

17% of renters believe renters insurance is not important.

If you rent your home or apartment, do you carry renters insurance? According to a www.rent.com survey 60% of renters do not bother carrying renters insurance. Younger people are even more inclined to not carry renters insurance, a whopping 72% of respondents acknowledged this fact.

Fifty one percent of seniors who rent their home carry renters insurance. Many simply believe it’s too expensive. Yet the costs to have renters insurance are actually very moderate to reasonable at a cost of $180-$250 or so per year. However, the fact is many seniors are battling having limited income and too many hands reaching into their pockets. The cost of food and utilities, health care and other items goes up over time. Invariably, something gives and giving up their renters insurance is an easy decision for many.

Then again, American’s make choices:

50% of American’s spend at least $80 per month on coffee.
66% of working American’s spend around $148 per month buying lunch, instead of packing it and saving the money.
Renters insurance works out to about the price of two at the movies, per month

Why buy renters insurance?

A house fire takes place every 90 seconds. In an apartment you not only have to be concerned about your property but the behaviors and habits of other tenants. What if they cause a fire that spreads to your building? A break-in occurs every 15 seconds.

You don’t want to wait until there is a claim to buy it. Then it’s too late.

Do you worry about being dropped by your insurance carrier?

A story ran in the Wichita Kansas area spoke about a couple of clients who were being dropped by their homeowner insurance carrier. The client was upset and confused.

The reasons why an insurance carrier would drop you from coverage probably variers from carrier to carrier. But typically, it seems most insurance carriers look at a five year track record for claims. If you have one claim in five years they accept that ratio – unless (perhaps) it is some type of major claim involving water or theft. Then the rules or guidelines may fly out the window.

Theft and water damage claims are looked upon by insurance carriers as different than mother nature, wind, hail and storm claims. While an insurance carrier may drop someone for two mother nature type claims I would not say it is an absolute with every carrier. However, anytime you mix in a theft and water claim they ratchet up their dislike.

One key is to carry a higher deductible, at least $1000. If your carrier offers a $1500 deductible consider increasing.

Plus, have a few thousand dollars in savings set aside if possible for unseen, emergency situations like claims. If you have a claim for $1800 are you going to pay $1800 to keep it off your claims history or file and have an $800 claim (after your deductible). I am not advocating one way or the other except to say I would likely pay this type of claims out of pocket to keep it off my record.

Insurance has gotten to be a catch-all for every claim situation. Ideally, it’s major claim protection. Though I understand not everyone has the ability to pay $1800 out of pocket and would need to utilize the insurance policy.

Health insurance has been a terrible trendsetter for many. We go to the doctor and pay $25 copay. The bill might be $5000 but we’re so happy to only pay a small co-pay. In some ways we’ve gotten used to using insurance and expecting to pay a small amount.

One of my client’s had a major water claim. The bill totalled about $100,000. I heard this same carrier had another client with a fire claim that cost at least this much or more. How many insurance policies does this carrier need to recoup their losses? When they charge $500-$800 per year per policy it takes alot, especially when many other people are filing claims too.

We have to keep in mind that the risk is great for the insurance carrier too. That’s why they get nervous with fire and water type claims. Particularly with these types of events we, as consumers, must do a good job of minimizing the risk in our homes.

How well do you understand auto insurance?

A company conducted an auto insurance quiz with 500 consumers. Their score – 34%.

It’s an amazingly low score considering people buy car insurance over their entire lives. The study did not reveal age information but if drivers are over 30 there is little reason to not understand your policy more. The internet today offers anyone the ability to research anything.

Here are a sample of the questions to help you determine how well you know your insurance.

Question 1:
What does auto liability insurance pay for?
Question 2:
What does collision coverage pay for?
Question 3:
What does comprehensive coverage pay for?
Question 4:
What does medical coverage pay for?
Question 5:
What does uninsured motorist coverage pay for?
Question 6:
If your car it totaled, what does gap insurance pay for?
Question 7:
If a friend has liability limits of 25/50/40, what does that mean?
Question 8:
If your friend borrows your car and wrecks it whose insurance pays?

Only 2% of quiz respondents understood what comprehensive coverage is. If you are unsure about the answers you can visit some of the pages on our site, contact us or do some online research. Never rely on someone else to know or explain your own coverage to you. Insurance is important, especially car insurance. It is always best to know what you are buying and how that product covers/ protects you.

The High Cost of Fraud

Some years ago I was traveling on a fairly busy two lane road in Tempe. I pay good attention as I drive but when I see a green light in front of me at no point do I expect the car ahead to slam on their brakes. But that’s exactly what happened. The vehicle ahead, loaded with men, slammed on their brakes. I could see them looking back at me expecting to get hit. The light was green.

This is a common type of fraud, where a vehicle causes an accident and the passengers all hope to hit some small jackpot against the insurance company by claiming personal injury. And no doubt they probably have a law office ready to handle their claim.

Fortunately for me, I hit the brakes quickly and barely stopped in time. Our bumpers must have been an inch apart. Once they realized I had avoided a collision, they hit the gas and sped off.

The truck behind me was not so aware as he slammed into me viciously. And to make matters worse, the pickup driver had no insurance.

TAKE IT FROM ME – DO NOT TAIL GATE!!!! At some point in your life you will end up following a scam artist hoping to get rear ended.

Edmunds.com estimates that fraud adds $200 – $300 per year to your insurance premium. Edmunds advises being aware of another type of staged claim – the 4 way stop accident. Your vehicle arrives at an intersection at the same time as another. The other driver, seemingly courteous, waves you ahead. So you proceed only to find the other driver flooring the gas pedal to cause you to hit them.

Insurance companies are no stranger to fake injury claims. But disproving them is difficult. So it’s mostly up to you and me to be diligent in our driving, be careful, don’t speed and do not at any time tail gate.

Recently I was at a stop sign awaiting for the traffic to clear enough for me to pull into the closest lane. A driver behind me must have been in some sort of hurry as she laid on her car horn beeping at me to merge into the busy traffic. Sorry, but I am not risking my life, my vehicle and someone’s else life/vehicle for a driver who is late to get wherever they are hurrying to.

As all safe drivers should do, I waited until it was safe to merge into traffic. The girl behind me quickly followed me into traffic and cut around several vehicles. Imagine my surprise (being sarcastic) when I arrived at the next red light and this rushed driver was sitting there. Hurrying rarely works but puts everyone around at risk.