It’s time to make your annual New Year’s Resolution. As you remain captive awaiting the Corona Vaccine,  committing a few hours to review and update your insurance coverages could pay big dividends.

Do you really know what you are covered for with each policy you have? Are you paying a competitive rate for the coverages? Do you even need the coverages you have? Are there coverages you need but do not have? How you purchase your insurance can play a big role in your level of confidence that you have the coverages you need.

Today you have several resources to purchase insurance. Traditionally you sat across the table from a licensed insurance agent who guided you to the coverages you need. Today that is still a resource for you, but you can also buy it online or through an 800 number. The disadvantage of the latter two options involves the lack of education for what you, the consumer needs vs. what you are purchasing. Customer service for many of those internet and 800 number companies remains an issue prompting continued reliance on a local insurance agent.  

Let’s start with a few comments on your credit score. Take out a mortgage or loan and you see that your credit score affects the rate you are charged for the loan. Your credit rating has a similar impact on most insurance that you will purchase. It has been shown that there is a direct relationship between a low credit score and both the frequency and severity of the losses you will experience. Taking steps to improve your credit rating will help you long term but for the short term, if you are married of living with someone, consider who has the better credit score and make them the primary named insured. Some companies only consider the credit score of the first named insured.

Besides credit scores, your auto insurance rates are heavily based on the usage of the vehicle, the coverages you select, and the vehicle itself. If you are one of the many whose vehicle usage has changed (perhaps you’re working from home for the foreseeable future) changing your rating base from “a daily Commute of 9-15miles” to “Pleasure Use” can dramatically affect your rates. Certain cars are more commonly sought after by car thieves and some are viewed as high-performance (high speed) vehicles. The raters for those vehicles reflect those exposures. To better protect your financial well being consider increasing your liability limits. If you have an accident where settlements exceed your liability limits, it is you that have to pay the thousands of dollars that remain due. Doubling your liability limits does not double your rate; it often costs an additional $10 a month to double your liability limits.

Homeowner insurance is a very confusing coverage to try to compare “apples to apples”. The discount coverages may use the standard Homeowner 3 (HO3) policy document, but most of the better companies include with that HO3 additional coverage package options for a little additional cost. How your policy deals with the valuation of your personal property is a big consideration as are their limits on jewelry. There are coverages that the standard HO3 does not include like coverage for refrigerated products and sump pump failure but these are a few of the many varying coverages offered between companies. So if you think you may have a standard HO3 policy, you might want to explore what other companies might offer.

Adjusting your deductibles can lower your insurance cost. How long has it been since you had a loss that exceeded your deductible? If you had increased your $500 deductible for the last three years to a $1,000 deductible,  the savings is likely more than $500. The savings is much less when you jump to a $2500 deductible so that likely is not in your financial best interest.

The Covid virus has many people reconsidering how much life insurance they should have. Your life insurance needs vary by the financial reliance you have on your spouse or even another person. If their death eliminated financial support that you depend on them for to maintain your quality of life, then for the time you are financially dependent on that person is cause to have a life insurance policy. Simply explained, life insurance products are basically for a specific term (a term policy) or for a person’s entire life (whole life policies). There are a wide range of different life insurance products that are a mixture of term and whole life then mixed with investment strategies. Because of the variations, this topic worth addressing in a separate edition of “Insurance Matters”.

Do you have an Umbrella policy? The concept of an Umbrella policy is to extend an additional layer of liability coverage over each of your individual liability policies as included for your home, auto, boat, and motorcycle. It is an inexpensive policy because it is only responding when you have a loss that potentially may exceed the “underlying” or base coverage liability limits. No one plans on having an accident that seriously injures someone. But accidents happen and the consequence may flush away all the saving and investing you have done so far in your life. It is cheap money for the protection it provides.