Protect Your Assets With Property Insurance
If you’re working hard to create personal wealth, you need to take the necessary steps to protect it. Insurance products exist so you can protect yourself from major financial loss; it is simply a promise of reimbursement. In order for you to be eligible for that reimbursement, you have to pay a fee (known as a premium) on a regular basis (monthly, every 3 months, every six months, or every 12 months). When you’re shopping for insurance products, you should match your needs with what the product offers and seek out the best deal, although with the plethora of insurance products out there that’s easier said than done. A solid credit history is also important because insurers use credit information to price most insurance policies. You can buy insurance to cover all kinds of risks, but basic needs can be met with property, health and life insurance. This post’s focus is on property insurance.
PROPERTY INSURANCE
Auto Insurance
In the United States of America, motorists are required by law to carry a minimum level of insurance to ensure that the driver can cover costs to people or property if there is an accident in which the driver is found liable. If you have taken a loan to buy your car, you are typically required to have full coverage on your vehicle.
Make sure you have at least the basic coverage. Think about your financial situation. How much you can afford to spend to repair or replace your vehicle after an accident. You could also be liable for paying medical expenses and other costs to any other person or property you damage if you are not adequately covered.
You may select a higher deductible (the amount you pay out of pocket before insurance kicks in) and receive a more affordable rate on the premium (the cost of the policy). If you have your emergency savings in place, you will feel more confident about taking out a higher-deductible policy, which will lower your premium costs.
Home Insurance
Homeowners insurance covers your home and possessions. It provides coverage in the event of damage to your property, as well as liability for injuries and damage you and your family cause to other people (including damage caused by household pets). A standard policy insures the home itself and the things you keep in it.
If you took out a mortgage loan, your lender will require you to carry a certain amount of insurance coverage as long as the mortgage is in place. You may also consider a higher-deductible insurance plan to save money on your homeowner’s coverage.
Standard homeowner’s coverage insures your home and its contents against loss from most disasters, including fire and theft, but there are exceptions. The most significant ones are damage caused by floods, earthquakes and poor maintenance. You must buy separate policies for flood and/or earthquake coverage. Maintenance-related problems are your responsibility as the homeowner.
Another type of household protection, a home warranty, is a service contract that protects the homeowner from unexpected costs for repair or replacement of major systems. These might include heating and air-conditioning, plumbing, electrical systems or a water heater. If you’re buying a house, the seller will sometimes provide a one-year home warranty to give you added confidence. You then have the option of renewing the warranty at the end of the year. The only thing with those warranties is that you have to read the fine print.
You may have paid your dues each and every year and believed everything in your home was covered. Then one day in August the A/C goes out so you call the Home Warranty company who sends a tech out to look at the A/C. “Yep” he says “Your A/C equipment is shot, you’re going to need a new one.” “Good thing I have this warranty” you think. You may soon find out that your warranty will not cover a new A/C because you failed to have it “serviced” each year or because the service tech says the reason it went out was because of a “Pre-existing” condition. So read the fine print! And get several opinions before you make a decision. If you have a claim that you think is legitimate, check with your state’s Attorney General Office. They will give you all the necessary information to file a complaint.
Lastly, if you are renting your home or apartment, you should purchase renters or contents insurance to cover your possessions against loss from fire or theft. Your landlord’s insurance will only cover damage to the building, not its contents. Also, if someone is hurt in your rented home, that liability is yours, not the landlord’s.
Auto Insurance Tips
Getting several quotes on insurance for a motor vehicle may save you hundreds of dollars a year. Other ways to reduce your insurance premium are:
- Raise your deductibles on collision and comprehensive coverages. If you have an old car, you might want to drop these coverages altogether.
- Take advantage of discounts. Some companies offer discounts to motorists who drive less than a certain amount of miles per year, are students with good grades, have taken a safe-driving course or are over 50 years old. You might also be able to get discounts if you insure more than one vehicle, insure your vehicle and your home with the same company, have had no moving vehicle violations or accidents in three years, have anti-theft devices or have safety features such as air bags.
Keep Your Guard Up
- Be wary of people selling insurance door-to-door and over the telephone.
- Be suspicious if, after an accident, a stranger contacts you to offer “quick cash” or recommends a particular attorney or healthcare provider. Report the incident to your police department.
- Don’t give your insurance identification numbers to companies you don’t know.
- Carry a disposable camera in your glove compartment. If you are in an accident, take pictures of the damage and the people involved. Ask for names, telephone numbers and driver’s license information for all those involved. Getting contact information for any witnesses is also a good idea.
Homeowner/Renter’s Insurance Tips
You may be able to save hundreds of dollars a year on homeowners insurance by comparing quotes. You can also save money with these tips.
- Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
- Ask your insurance agent about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire retardant roofing material. Persons over 55 years of age or long-term customers may also be offered discounts.
- Insure your house NOT the land under it. After a disaster, the land is still there. If you don’t subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.
- Don’t wait till you have a loss to find out if you have the right type and amount of insurance.
- Make certain you purchase enough coverage to replace what is insured. “Replacement” coverage gives you the money to rebuild your home and replace its contents. An “Actual Cash Value” policy is cheaper but pays only what your property is worth at the time of loss—your cost minus depreciation for age and wear.
- Ask about special coverage you might need. You may have to pay extra for computers, cameras, jewelry, art, antiques, musical instruments, stamp collections, etc.
- Remember that flood and earthquake damage are not covered by a standard homeowners policy. The cost of a separate earthquake policy will depend on the likelihood of earthquakes in your area. Homeowners who live in areas prone to flooding should take advantage of the National Flood Insurance Program.
- If you are a renter, do not assume your landlord carries insurance on your personal belongings. Purchase a separate policy for renters.
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Shopping for and buying insurance on the Internet offers consumers a new level of convenience, but you need to protect yourself when purchasing insurance online. Do your research, double-check the company and agent, update your browser (newer browsers are equipped with security measures that alert you to insecure sites), get all quotes and policy information in writing and keep detailed records. Go to your state insurance department for more information on company and agent requirements.
If you suspect fraud, call the National Insurance Crime Bureau’s hotline at 1-800-835-6422. For more information, check out www.insurancefraud.org.
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