A home is a very important asset we possess. It is a place that gives us comfort, privacy, and the place we rush to after a long day at work. The security we feel when we are home may be put in jeopardy when we listen to forcasts of tornados, hail, or other natural disasters on the news. A good example is the heavy line of thunderstorms hammering down on Austin and Central Texas.

We often look to our Homeowner’s Insurance for financial assistance in repairing or rebuildiing our home. We also look to restore that cozy atmostphere we are accustomed to. But what about the financial burden of living elsewhere while the home is being restored? What if we need to live in a hotel for week or an apartment for several months? You may find coverage under your Homeowners Policy Section I, Coverage D – Loss of Use.

The remarkable feature of Loss of Use Coverage is that it reimburses you for increased or additional living expenses due to a covered loss. It is important to note that this type of coverage only applies when your home is uninhabitable due to the covered loss.

“Additional living expenses” are defined as any necessary expenses you incur by being temporarily displaced from your residence due to a covered loss. Additional living expenses could include hotel and restaurant bills. In some cases, transportation expenses could also be included in the scope of Loss of Use Coverage. 

Loss of Use Coverage has its limitations. Loss of Use Coverage is usually restricted to a percentage of your Coverage A –  Dwelling. Depending on your carrier, this could be between 10% – 30%.  Additionally, Loss of Use Coverage will typically end after a given period of time. For example, coverage may end after 12 months. Your insurance company may also require other additional conditions be met. For example, they may require you to secure the home against any further damage.

To have a clear picture of Loss of Use Coverage, read the provisions of YOUR policy carefully and stay up to date on policy changes at renewal.

Condo owners must approach their insurance needs differently from owners of a single family home. They must first determine which structural items of the condominium they are responsible for insuring and then determine a replacement cost.

Here are three tips to help determine coverage and potential gaps

                    1.    What does your master insurance policy say? What does your condo associations’ by-laws state?

Owners of condominium units likely do not own the entire condominium complex. Typically, they own their own unit outright and share ownership of the rest of the complex with all the other owners.

From an insurance perspective, that means all individual unit owners have a collective responsibility for insuring areas of the complex owned in common — building exteriors and hallways, the pool area, etc. A condominium association, in most cases, collects monthly dues from unit owners and uses a portion of these funds to insure those common areas.

Whenever insuring a condo, your agent should ask you for a copy of your condo association’s by-laws. This will state exactly what the condo association and the master insurance policy intend to cover in the event of a loss.

By-laws and responsibility will vary between condo communities. It is best to take the time to understand what you will be responsible for should a loss occur. Don’t wait until it’s too late to find out that the condo association policy will only reimburse you for the formica countertops that were originally installed, and not the marble countertops you bought to upgrade your kitchen!

                           2. Strongly Consider Loss Assessment Coverage. 

Condo association insurance will include insurance coverage for the commonly shared building and common areas. In the event of a loss, the condo association’s insurance will step in, but there could be a sizable deductible. To cover the deductible, the association will evenly assess all the unit owners. If you have Loss Assessment Coverage, your insurance limit may cover some or all of that assessment.

This coverage could also come in handy any time your community is assessed fees above your typical HOA fees. An example would be a lawsuit.

                           3. Insuring your contents and replacement-cost coverage. 

Once you determine the appropriate amount of coverage for your condo, you’ll need to decide how much coverage to purchase for your contents.

What are my contents? Basically, if you were to turn your condo upside down, your contents would be anything and everything that falls out. For these items, be sure to add or endorse your policy with replacement cost coverage.

Why? Your basic policy only replaces the value of the insured item minus depreciation. For example, when you bought your TV 3 years ago, you may have paid $1500. Today, your that same model may only be worth $500.

By contrast, a person with replacement-cost coverage would receive a check for what it would cost to replace the old TV with a new model. Depreciation is not used when calculating replacement-cost.

Use our guide to help!

Here are three short videos to answer health insurance’s most common questions.

How Can I Save Money on Healthcare?

Deductibles, Copays, Coinsurance, Oh my!

How Do I Choose a Health Plan?

Whether you’re starting out, settling down, or retired, protecting what’s important—that’s what matters most. Our guide can help you ask the right questions, so you can find the right insurance to fit your needs. Follow this link to our questionaire!

For example, your engagement ring may cost $15,000 to replace, but your Homeowners policy states it will only give you $1500 in the event it is stolen. In this case, you would want to look to purchase a Personal Articles Floater.

A Personal Articles Floater is an insurance policy normally used to insure certain personal property on an all-risks basis.  The policy is particularly appropriate for property that receives limited coverage under the homeowner’s forms, such as furs, priceless art work, expensive jewelry, silverware, cameras, musical instruments, stamp and coin collections, and similar property.  Such a policy affords higher coverage limits and protects against the causes of loss not covered on a homeowner’s policy.

The term “floater” means just that; the policy floats, or travels, with your items of value.  Many personal articles floater insurance programs provide worldwide coverage, which means that items listed in the insurance policy can be covered wherever they are in the world.

A good rule of thumb would be to let your agent know of any single item in the home that has a replacement cost greater than $500 – $1000.

What is an insurance score?

An insurance score is determined by reviewing a consumer’s credit history. A carefully developed and tested computer model performs this analysis, and looks at information such as payment history, whether you have filed for bankruptcy, if you have bills with a collection agent, any outstanding debts you may have, and the length of your credit history.

Unlike a “credit score,” which is typically used when you are seeking a loan, an insurance score is used to help insurance companies accurately assign the best price available for your policy.

When calculating your insurance rate, insurers typically group consumers into categories. For example, driving record and age are the most often used categories to help calculate the cost of a customer’s auto insurance policy. Insurance scores are just another method insurance companies use to determine what you pay for your policy.

According to extensive industry and independent research, people with certain patterns in their credit history that result in a lower insurance score are more likely to have claims that need to be paid by their insurer. For instance, keeping your credit card balances below the maximum limit and making regular, on-time payments will result in a higher score. On the other hand, if you have a history of “maxing-out” your credit cards to their limits and submitting payments late, your score will be negatively impacted, meaning a lower score.

An insurance score DOES NOT take into account income, race, gender, religion, marital status, national origin, or geographic location. It only reviews your credit history.

Why do companies use insurance scores?

Since insurance scores have been proven to be highly predictive of the potential for future losses, they help insurance companies determine the likelihood that a customer will file a claim, and thus allow carriers to set rates that are accurate and appropriate for each customer. This enables carriers to offer insurance coverage to a broader range of customers. What’s more, many of these customers benefit from the use of insurance scores in the form of lower prices.

Insurance scores are used in the same way as other traditional underwriting factors. As a group, people with certain patterns in their credit history receive lower insurance scores and are more likely to experience a loss and file a claim. They are charged a higher premium to reflect that risk. This allows Travelers, and other insurers, to give better rates to consumers with higher insurance scores, who are less likely to file a claim.

Credit history helps predict the potential for future losses, but it is not the sole factor in determining the cost of your policy. It is one of several factors used to arrive at the best rate possible. The age of a driver and prior claim history are two other important factors that are also used to determine your rate.

What information affects my insurance score?

In determining your insurance score, the following information is used:

• Payment history (Do you generally pay your bills on time or are you more than 60 days late?)
• Bankruptcy, foreclosures and collection activity
• Length of credit history
• Amount of outstanding debt in relation to credit limits (Are you “maxed-out” or are you well within your limits?)
• Types of credit in use (e.g., mortgages, installment loans)
• New applications for credit you have requested

Ignore the ugly wallpaper. The focus of this photo is the water line to a refridgerator ice maker. This little guy caused a heck of a lot of damage over a period of several days.

Our first call was to an Insured Plumber, who informed us of a broken valve.

Although the tile in the kitchen went unharmed, the wood flooring in the adjacent room met a different fate. Moisture from the water line produced a teepee and discoloration. A quick moisture reading told us to contact a home restoration company and our insurance provider!

Because an insurance adjuster could not meet us for some time, we contacted a flooring company to get an estimate. There are cases in which a wood flooring would NOT need to be pulled up at all and simply pushed back into place. This was not our case. That 4 ft x 10 ft area was going to cost us an entire floor.

Some boards were pulled up in an attempt to dry the area and await our adjuster’s opinion.

Acting like a sponge, sheetrock will soak up water. The longer sheetrock is left damp, the greater your chances of mold.

Yeah! Home Restoration to the Rescue! Shown are *just a few* dehumidifiers and blowers to draw moisture out of the floors and walls

Even though the floors and walls looked and felt dry, the moisture reader said differently. This process took three days to complete. Let the professionals tell you when the job is done.

Dehumidifiers draining into the kitchen sink.

This wood floor was originally glued down. “Floating” wood floors are much easier to remove. Unfortunately, there is no machine to pull up glued down wood flooring. It is all done by hand with a small crow-bar and a hammer and will greatly add to the expense of the claim.

Your contractors won’t always show up. They don’t mind if you’d like to get back to work.

The floor fully removed. Once the floor is up, the majority of the glue must come up too. More work, more time and more expense!

This section of the floor was exposed to the water and air the longest, hence the discoloration.

Friendly staff who see you too much.

A new floor being installed. Notice the “floating” nature of this floor as compared to the glued down nature of the last one. If this floor needs to be replaced, removing it will not be as expensive or time consuming!

Complete!

This home is a Rental home near New Orleans, which meant we were limited in our options for insurers.

1. It was important to us to have an admitted carrier. Unfortunately, our Louisiana company outsources it’s adjusters, which can (and did) lengthen response time during a claim. This is something you should consider when choosing an insurance company.

2. If you have a rental home, be sure that you require your tenants to have renters insurance AND make sure their deposit is greater than your insurance deductible.

Thanks for coming on our journey!

First, take proper precautions to reduce your risk like obeying traffic laws and performing regular maintenance on your vehicle. Second, understand how your auto insurance steps in to protect you should you have a claim. Here’s a good start:

Liability coverage for an auto is available in two ways:

1.       A single limit that applies to all injuries and property damage you cause in a single accident. One pool of money pays for all your liability.

2.       A split limit policy has three limits:        

a.       One for bodily injury you cause to a single person

b.      One for all injuries caused in the accident (involving two or more people)

c.     One for all the property damage you cause in the accident

An example for a split limit policy would be:

Mike runs a stop light and hits a vehicle with two passengers. He has a split liability policy with limits of 50/100/50.  (a/b/c)

Passenger One has Bodily Injury bills totaling 30k and owns the vehicle. The Property Damages incurred total 19k. Mike’s auto policy is sufficient for Passenger One because he has 50k for bodily injury per person. He only has 70k left (100k – 30k) for Passenger Two. His third limit shows that Mike also has 50k for property damage.

Passenger Two has bodily injuries totaling 65k. Although Mike’s pool has 70k left, Mike’s per person limit states the insurance company will max at 50k for Passenger Two. So, Mike will have to fork over 15k.

Now, what about you? What if someone hits you and he doesn’t have sufficient coverage? No coverage? Or he doesn’t stick around to introduce himself?

There’s coverage for that. It’s called Uninsured and Under Insured motorist coverage. (UM/UIM) When you are injured in an accident caused by another auto, the economic value of your injury equals your out-of-pocket expenses and compensation for pain and suffering. If the other driver in underinsured for your case, you may get a legal judgment against him and try to collect from him personally. Because this may be a long process, look to your UM/UIM

1.       Uninsured Motorist – either a hit and run, or no auto insurance

2.       Underinsured Motorist – have auto coverage, but not enough to cover your Bodily Injuries or Property Damage

Next on the list is coverage for your medical bills. You will see this as either Medical Payments Coverage or Personal Injury Protection Coverage (PIP).Regardless of fault, these coverages will pay your medical bills in the event of an accident up to the limit you purchased. PIP as an added protection of reimbursing you for some of your lost wages and possibly a replacement service like hired help.

Last, what about your vehicle?

Comp and Collision offer coverage for your vehicle. Collision insurance covers damage from colliding with another object like a vehicle or post. Comprehensive steps in to cover other types of accidents including fire, wind, hail, and theft. These coverages have separate deductibles, so evaluate your options when comparing coverage.

                We will be exploring each coverage in more detail in our blog! Stay Tuned!

Re: Auto Accident on Jan 1, 2011

Dear Valued Client:

You are being sued by Mr. John Contractor, the injured party of the above referenced accident, for $700,000. Per your insurance limits, Your Insurance Company will cover the defense costs for $300,000 in liability. You will be responsible for your own defense costs beyond that amount, as well as the remaining judgment.

We highly recommend you seek legal guidance for the part of the lawsuit not covered by our policy.

Thank you for your business,

Your Insurance Company

Don’t think you could ever be the Valued Client in this letter?   Besides causing the accident, let’s consider just what makes you a likely candidate of a lawsuit.

Two major factors are:           WHO is the injured party, and HOW MUCH are the damages.

In the case of the above auto accident, Mr. John Contractor is a full time employee of ABC Contracting and makes $70k a year. Due to the accident, he has a broken leg and will not be able to work. It just so happens, that he does not want to pay the medical bill and physical therapy bill for the accident that you caused. He’d also like to continue to pay his mortgage and the quality of life he had before the accident. So, would you be so kind as to pay the 10 months of lost wages he is due. Mr. Contractor’s $300/hour lawyer would also like to see a little extra for his client’s pain and suffering. Oh, yes, as well as payment for his bill.

Note: Although your automobile is regularly viewed as the greatest source of liability, your home, rental property, boat, and even your computer can bring about a lawsuit.

Another factor that makes you a great candidate for a lawsuit is your CURRENT financial status. The size of your current income or assets will affect the likelihood you getting sued. Your net worth or even PERCEIVED net worth can become a target.

The last factor we will mention is your FUTURE financial status. I often hear people say, “No one would sue me. I don’t have any money.” That may be true, but courts do not just look to your checking account. If there is a large and rightful financial judgment filed against you today, it will wait for your financial situation to improve. Maybe you will receive a modest inheritance, or graduate from engineering school. Congratulations, a lump sum or payment plan will be sufficient.

Great, what’s a suable person to do? First, carry higher liability limits on your primary insurance policies like your home, renters, auto, and boat. A typical home or auto policy will have a max limit of 500k in liability, and that’s just not enough. Second, buy an umbrella policy!  Umbrella policies are excess liability coverage in addition to your primary insurance policies. Furthermore, some umbrella policies can fill coverage gaps that are not covered by your individual primary policies. An example would be liable, or slander. The best part is that they are very inexpensive and get incrementally less expensive with increased coverage. For example:

The first 1 Million in coverage will typically range from $150 to $250 PER YEAR.

The second million dollars in coverage will range from $75 to $100 PER YEAR.

The third and subsequent increases will be around $50 each PER YEAR.

The bottom line is:         If you’re not perfect, an umbrella policy is going to give you added peace of mind. No one has ever been bankrupted by $150, but I’ve certainly witnessed it by $1M.

Call us today to discuss your individual needs. 512-828-7010.

Carroll & Delaune Insurance Services, Inc

               When looking at the cost of homeowners insurance, sometimes the first thought that comes to mind is, “How can I lower this cost?” Before you start trimming your policy of its coverages, it’s a good idea to know what factors affect the cost of your insurance. To illustrate these factors, we need to think like an insurance company.

                As an insurance company, before I decide to insure a risk I will want to know AT LEAST two things: What are the chances of a loss? And, how much will the loss cost?

              Here are some of the major factors that an insurance company will take into consideration:

• The location of the home. Not surprisingly, with the number of hurricanes to pass through Southeast Texas, insurance companies are reluctant to insure in the area. Even within the Southern Region of Texas is a tiered basis in which the insurance company will become more exclusive. More acute factors include proximity to commercial property, or the distance to the nearest fire station.

• The construction of your home has a lot to offer an insurance company when calculating your premium. If you have an older home, an insurance company will not see the antique furnace as an asset to home, nor the needed updates to the electrical wiring, not to mention pier and beam homes are no longer in production. So, the insurance company looks at this risk and thinks, if a loss occurs not only would we have to replace the damage, we might have to update!

• The insurance company will also run a report that gives the claim history of the specific home you have in mind, also known as the Comprehensive Loss Underwriting Exchange (CLUE). This allows the insurance company to know if the home is susceptible to a particular peril, like mold. It will also be able to allocate claims to an individual.

• Then the insurance company will get personal, but in a statistical sense. They will ask, “Who is going to be living in this home?” The best way for the insurance company to get to know you is through your credit-based insurance score, so a regular credit check may be in order.

For more information on Homeowners Insurance, attend one of our webinars or call us at 512-828-7010!