My Personal Finance Blog

How can you tell that you really need home insurance? Well, if you’re not planning any illegal things like insurance scam (which is definitely not a good idea, especially these days), it will be really hard to predict any situation when you will actually need some insurance coverage for protecting your house. Until, of course something bad happens and you will need the money to pay for the damage. However, there’s a range of circumstances that make an insurance policy for your house a really welcome if not necessary addition to your paperwork portfolio.

The following are the most typical events that will make having home insurance a necessity unless you have a lot of money and can rebuild your home from scratch without worrying about finances.

Fire

Fire is definitely one of the most hazardous of perils that can happen to a house. It has the potential to completely destroy an entire building within minutes and there’s a very little chance that any of your personal belongings will survive it. Fire is very hard to control and it can happen any time, with most cases of fire being reported when the home owner is actually away. It can be a spark from a malfunctioning home appliance or a cigarette butt that lights up a pile of dry leaves that you’ve left in your front yard. And the moment you arrive home you find nothing but a pile of ashes instead of all of your belongings. A standard homeowners insurance policy provides protection against any forms of fire.

Flood

Living in an area with no large bodies of water nearby doesn’t mean that you don’t have the risk of having flood damage in your house. Things like heavy showers, bad water pipes and even a broken washing machine can flood your house and damage a large part of your belongings beyond repair and restore. Sometimes, the damage from flood can be much worse that that caused by fire. Standard homeowners insurance policies do not carry coverage against flood damage and you will have to purchase such a policy as a weaver to your current one or buy it separately.

Earthquake

Earthquakes are certainly the hardest to predict and hardest to protect against of all natural disasters. An earthquake can destroy an entire town or city within just a few minutes, turning even the most durable of constructions into a pile of dust. And the best thing you can do during an earthquake is to stay away from your house that can collapse over you. Standard insurance policies include coverage against earthquakes, too. However, in order to make sure you will also be paid for the lost belongings you should have an inventory of all the items (especially valuables and electronics) with detailed information on every piece that can further be used for reimbursing the cost of all the lost belongings.

There are other circumstances that can also be a threat to your house and you want to have coverage against them. Having tornado insurance in an area where they are common is definitely a must. However, keep in mind that no one is imposing you to have home insurance, It’s a decision choice that can save you a lot of money and time in case something bad happens to your house.

This article draws on a big court case in Indianapolis with AIG disputing a life policy worth $15 million. Under normal circumstances, insurers pay out whenever they receive the death certificate. They may privately grumble the claim has come earlier than expected, but their public face will offer sympathies for the loss and pay. Indeed, if any company gets a reputation as a bad payer, their business is likely to dry up fast. With PR and marketing being everything in persuading people to part with their money, insurers usually pay out without comment. Why so different in this case? Well, the first issue is the circumstances of the death. This was a confident older woman aged 74 and she was found fully-clothed, drowned in her bath. The homicide unit has investigated and, despite the fact her family said she always preferred to take a shower, it has ruled her death accidental. No matter that the world might find the circumstances “suspicious”, particularly because the holder of the life policy admitted to being the last one to see her alive, there is no ongoing investigation. This has left the insurance company to dispute the payment.

Four years ago, this active lady was a director responsible for marketing. The company and fellow director insured her life for $15 million. This is perfectly proper as a part of succession planning. It gives the company the cash to buy out the shares and cover losses while a replacement key person is found. Except there is some suspicion the appointment of this lady as a director was only done to justify getting the insurance coverage. The rules are reasonably straightforward.

If you go to a race track, you can bet which horses will win and place. You pay and if your luck (and skill) give you the right result, the bookmaker pays. You could ask the bookmaker whether it is possible to bet on the day, week, month or year someone will die. If such a bet was accepted, you would have a direct financial incentive to arrange for this stranger’s death at the appropriate time. To insure someone’s life requires you have some direct interest in the individual, usually as a relative or someone upon whom you depend. That is why this company insured a marketing director and not an office cleaner. That position fits into the expectation of the insurer and justifies the big pay out.

There are about one hundred cases pending before the courts around the US alleging that investors have been insuring the lives of strangers. Because this is the equivalent of wagering or betting, the insurers are refusing to pay. In many of these cases, there are paper justifications for the policies, e.g. to insure a borrower. It will be very interesting to see how these cases are resolved. As for the ordinary case, you can confidently get life insurance quotes for any member of your family or other relatives. If someone acts as a carer, this will justify a higher pay-out to cover the cost of a replacement. But, if you are potentially insuring someone not related to you and not acting in some protective role towards you, disclose this fact to the life insurance company before confirming the policy. Only by complete honesty at the outset can you protect everyone’s interests in the long run.

Starting with excessive rates to buying a separate policy for your teen driver, dealing with auto coverage is often confusing, complicated and it also involves a lot of money to be spent. Still, you can’t go around it, as it a legal requirement in most states and a helpful tool to give you a peace of mind when dealing with traffic accidents. Sure, it may seem like a dirty job and you don’t want to waste your time on it. But what if there’s an easier way to get your auto insured without all the hassle you fear of dealing with? If you are interested, read the frequently asked questions below as answered by insurance experts, who know how to get the right policy no matter what’s your situation.

Q: Am I obliged to carry insurance coverage when driving my car?

A: Nearly all states have it as a legal requirement for drivers to carry liability auto coverage as a guarantee that the damages you deliver in a car accidents are paid for. Each state has a minimum amount of liability coverage that a driver must carry with his policy. And even the states that don’t have vehicle insurance as a legal requirement oblige the driver to show proof that he has enough financial resources to pay for the caused damage. Any other types of insurance coverage, outside liability coverage are purely optional and can be purchased with respect to your personal insurance needs.

Q: Is insurance required before buying a new vehicle?

A: If that’s your first vehicle, you will be required to have insurance coverage before even taking it from the dealer. Moreover, if you’re using an auto loan to finance the purchase, you may be required to buy additional types of coverage besides liability. If you already have a car and are changing it to a new one or buying an additional vehicle, you have 14-30 days to report the changes to your insurance company.

Q: How can I get cheap car insurance?

A: Compare insurance quotes in order to see what other providers are offering, and if it turns out that you’re overpaying – switch the provider. If your current rates are quite competitive, compared to other companies, see if you’re taking advantage of all the discounts you can opt for.

When looking for a new car, always make sure that the make and model you are interested in provides cheap car insurance options. Some cars are a lot cheaper to insure than the others, ask your insurance agent to learn what cars are the most cost-effective from the insurance perspective.

Another way to get cheap car insurance, although a bit risky one, is to increase your deductibles. By raising the amount of out-of-pocket expenses you can afford before the policy kicks in you get lower premiums. And if you’re driving an older vehicle that has a low market value, you may want to drop collision and comprehensive coverage as it takes depreciation of the car value into account.

You can also adjust the amounts of coverage your policy carries, although experts do not recommend decreasing them to the level of state minimums as it is usually not enough to pay for a serious accident.

It’s clear that insuring your home is a must if you are worried about your house and want to protect your property against different situations. Getting your home insured gives you some peace of mind and certainty that is particularly welcome in situations like fires, storms, floods, theft and other unpleasant accidents. However, most insurance buyers don’t quite know what exactly their policy covers, how much coverage they can expect and how to cut their insurance costs if they feel that the policy is too expensive for their wallet.

How much insurance coverage do I really need?

There are two main factors you have to consider when trying to answer this question:

• Replacement costs of your house. This is the amount of money you would need to restore or rebuild your house if it were damaged or destroyed. The best way to learn this is to multiply your square footage over the current local construction costs. Try asking different construction companies to determine the latter.
• Replacement costs of your property. The most effective way to learn the exact replacement costs of your belongings is to make an inventory of all the items in your house with the exact purchase value of each item. This inventory will be particularly useful when filing a claim, so try to make it as accurate and detailed as possible.

What does homeowners insurance cover?

A standard homeowners insurance policy carries coverage against damage delivered in situations like:

• Hail and windstorms
• Explosions
• Firestorms and lightning strikes
• Burglary and acts of vandalism
• Smoke and plumbing leaks

The policy will also pay for the medical costs if someone other than you or your family member is injured on your territory. And it will cover your living expenses if you have to move to another place while your house is being repaired or rebuilt.

Homeowners insurance may provide coverage against other perils such as floods or tornadoes, but you will have to buy a separate policy in order to get this type of coverage for your house.

How to economize on home insurance?

There are different methods you can use in order to cut down your costs:

• Improve your credit rating and try to keep the record as clean as possible. Those who have poor credit scores pay higher premiums for all types of insurance and homeowners insurance is no exception.
• Opt for discounts. It never hurts to ask your insurance provider about discounts, but it may turn out that they are quite easy to obtain. Most insurance companies provide incentives to those who install security features, fire and smoke alarms, or improve the safety of their houses.
• Raise your deductibles to the amount you can afford to pay upfront. Deductible is the amount of money you have to pay out of pocket before insurance coverage kicks in. The higher the amount of deductible the lower is your premiums. However, make sure you can afford to pay the specified deductible if something happens to your house.
• Shop around to get a competitive offer. Insurance rates for the same house can vary dramatically from one company to another. Try to get as any quotes from different providers as possible before purchasing the actual policy. You will be surprised to learn how different the rates may be sometimes.

You want to insure your health and ask your insurance agent to offer you a good policy. You are given quotes and start thinking about buying a certain plan when the inevitable question is asked “What type of plan do you want to purchase?” This question has left many first-time insurance shoppers confused as they didn’t know about any plan types before. Too bad, because by choosing the type of insurance plan you will pay for determines how your coverage will be distributed as well as how your medical services will be provided. And as you may guess this is crucial when it comes to insuring own health.

But do not worry, this article will explain the essence behind each coverage plan type you can get in the US so the next time you will be asked the question of plan types you would choose the perfect plan to meet your requirements.

HMO (Health Maintenance Organization)

HMO plans are the most popular type of managed care distribution these days. They provide a wide spectrum of healthcare services you can receive for a reduced fee or free of charge. But the main catch is that you can receive them only at specific locations and from specific professionals. And you will have to choose a primary care physician (PCP) who will refer you to other professionals when needed. Without your PCP’s affiliations you won’t be able to receive coverage for the services you took. Neither will you be covered for the costs if you address someone outside the network.

PPO (Preferred Provider Organization)

PPO insurance coverage is quite alike to HMO. This type of managed care also requires you to choose a PCP, however you have more options when choosing this doctor. This is especially useful to those who have a good relation with their family doctors who might be outside the insurance company’s network. Moreover, you have fewer restrictions on out-of-network services, still you will eventually pay more for them if compared to in-network services.

POS (Point of Service)

POS health insurance plans also require you to choose a primary car physician. But you aren’t restricted to a network your insurance company has. Still, it will be impossible for you to get individual health insurance coverage if you don’t get a referral from your PCP before visiting any other doctor.

EPO (Exclusive Provider Organization)

EPO health insurance coverage is almost the same as HMO plans. There’s a PCP you have to get a referral from in order to visit a specialist and there’s a network of physicians and facilities you are limited to. The only difference is that you pay only for the services you received, while with HMO plans you have to pay a regular monthly fee.

Fee-for-Service

This type of insurance coverage is the oldest out there and least complicated to understand. You have no restrictions on where to get your care or whom to address. You only pay for the services you receive when needed. However, you get less coverage with such plans and your overall expenses tend to be higher than with managed care plans.