Save Money on Your Insurance with Update Information!

A plethora of information goes into deciding your rates in property insurance: your credit score, loss history, location, structure type, and much more goes into configuring rates. On top of all that, each company weighs each of the factors differently. However, one of the easiest ways to save money with any company is having a thorough update history.

An Update History is an itemized list of all updates/major repairs that have happened since the initial construction of the building. All insurance policies that cover buildings, personal or commercial, will ask you for any known updates, and the more you know, the better the rate/coverages you'll get. Not everything will qualify for discounts, but the following items will:

Roof: One of the largest factors in getting a preferred rate is the year the roof was replaced. An old, worn-out roof increases the chances of a loss occurring tremendously, so the newer the roof, the better. Also, many insurers give a discount for hail-resistant shingles, so replace your roof with certified hail-resistant shingles when yours are worn out. 

Wiring: The building's electrical system can play a big part in rating. During the 60’s to 70’s, copper prices soared, so instead of copper, they used aluminium wiring…with disastrous effects. Aluminium isn't suitable for building wiring, and it has been the cause of numerous fires. Another very important item is if your building is using a fuse box or a breaker box. Breaker boxes replaced the fuse box because fuses created many hassles and safety hazards (E.g. fire hazards). So if your building has copper wiring and a breaker box, you’ll get a much better rate. Note that some insurers won't even insure buildings with aluminum wiring and/or a fuse box!

Plumbing: Way back, someone decided to use lead pipes for plumbing before we found out about all the 'fun' side-effects. Then copper piping used to be the norm, but as we all know from Lady Liberty, copper and water don’t exactly play nice together. Today, homes are made with plastic and/or non-oxidizing alloy plumbing. If your home has had its plumbing replaced, a discount might be available.

HVAC: Heating, Ventilation, and Air Conditioning units are another area where you can receive a preferred rate. When you have these replaced, always note if it gas, oil, or electric, and the type it is (Heat Pump, Forced Air, Central Air, etc.)

For each one of these, save receipts that verify when the update occurred and what was done. Keep everything in a file, and make a simple list of updates for quick reference. Also, when buying an older home, make sure the seller has all the update information!  

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Loss of Use Coverage: Keeping You Secure While You're Away

What is the Loss of Use Coverage? Why is it in my Homeowner’s/Renter’s policy and what all does it cover?

In your Homeowner’s or Renter’s policy, there is a coverage for Loss of Use (Coverage D). The Loss of Use Coverage pays your additional expenses when a covered loss happens at your home that makes it uninhabitable, or when one of the covered perils happens somewhere else and it causes your home to become uninhabitable. It is an added benefit in your policy, helping you maintain your normal standard of living after a loss.

The first coverage is for your additional living expenses due to a covered loss. The covered loss could happen at your home or someone else’s, but if either make your home uninhabitable, the additional living expense coverage will pay.

The second coverage is for fair rental value. If you rent out part of your home and a covered loss makes your home uninhabitable, this part of the Loss of Use Coverage will pay you back for the missing rent(s) you would normally receive. This coverage has an exception, as it will not pay for any expenses due to the cancellation of a lease or agreement.

The third and final part of the Loss of Use Coverage is for civil authority prohibiting use. An easy example would be a fire in an apartment building. Say the neighboring unit to yours catches fire, yet your unit is completely untouched. Despite this, the whole floor is deemed ‘unsafe’ by the Fire Marshal and you are forced out of your unit until further notice. The extra expenses for food, a hotel room, etc. are all covered. This part of the Loss of Use Coverage only lasts two weeks, however.

Things to Consider:     

•       Each part of the Loss of Use Coverage is subject to covered losses. This means that the only things you will have coverage for are the perils you are insured against. So, the broader your coverage, the better your chance you’ll be able to collect Loss of Use money. The broadest coverage you can buy is Special Coverage, which covers everything that happens, minus a short list of excluded perils. The next step down from this is Broad Coverage, which only covers a set list of perils.
•        Each part of the Loss of Use Coverage has a capped limit on what it will pay. The amount of coverage is usually 30% of the Dwelling amount (Coverage A). So if there are extra expenses over that, you will have to pay out-of-pocket.
•       Additional living expenses and fair rental value are both subject to the stipulation that these coverages will only pay for the shortest amount of time it takes to return to the home/find a new home. So if you intentionally delay the repair process, you will be expected to pay for the additional time spent.
•       Any payments made are only for additional costs of living, so if you normally have total monthly expenses of $1,000, only living expenses over that $1,000 will be covered. 
•       An endorsed policy may pay for Loss of Use on an Actual Loss Sustained (ALS) basis. With ALS, there is no limit to the amount you can collect under any of the parts of the Loss of Use Coverage. The only caveats to this is that you are still only covered for the shortest amount of time it takes to get you back into your home/into a new home, and the ALS payments will only continue for 12 months after the Loss of Use Coverage was triggered.
•       Determining how to preserve your ‘standard of living’ includes many things, such as the quality and type of meals, extra mileage, extra pet expenses, finding a proper quality and square-footage of the temporary residence, and much more is taken into account.
•       The exact amount the Loss of Use Coverage pays is often hard to accurately determine, as exemplified by the previous note. Being hard to determine, settlements often come down to trust and goodwill of the insurer. Having a quality insurer with a highly rated claim-support history is the key to getting a fair amount for your extra costs.

   Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

IRMI Tip of the Month: Credit Rating and Insurance Underwriting

A big factor in determining the premium of a personal auto policy has nothing to do with a person’s driving record—it’s his or her credit record. According to Conning and Company, more than 90 percent of insurers use an applicant’s credit history—his or her insurance risk score—to slot him or her into a certain program.

When a person applies for auto insurance, the insurance company asks for permission to pull his or her credit information. The insurer then secures a credit report from one or more of the credit bureaus—TransUnion; Experian; or Equifax. For more information on credit reports or to secure a copy of your own report, go to http://www.credit.com.

Credit scores range from 300 to 850. If your score is below 650, you may have trouble getting insurance or you may have to pay a higher premium. In order to improve your credit score, keep in mind the following factors that influence the score.

●       Payment history—The largest factor is credit and loan account payment history. A steady record of on-time payments going back several years shows responsibility.

●       Debts owed—The number of accounts you currently have, including type and balance. Try to have just a few active accounts with low balances.

●       Length of credit history—The longer your credit history, the better.

●       New accounts—Every time you apply for a new account, a record of that application appears on your credit report and drops your score. Limit the number of applications you submit.

●       Balance of accounts—It is best to have between two and six open credit cards and one or two loans.

●       Negative records—Collections, judgments, and bankruptcy filings will drop your score.

Get more personal lines insurance and risk management tips and ideas from IRMI.

Copyright 2008, International Risk Management Institute, Inc.

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Introduction to Sump Pumps

Diagram provided by sump-pumps-online.com

What is a Sump Pump? Where can it be found? Do I need a Sump Pump? How do Sump Pumps relate to insurance?

A Sump Pump gets rid of the water that collects around your basement’s walls. It is needed because water pressure on your basement walls can lead to big problems. The water to be Sump-Pumped is collected by perforated piping that runs around the outside edges of your basement. The water is sent to the Sump Pit, which is a basin for the water to accumulate in. The Sump Pump will be found in the Sump Pit, and will most likely be found in the unfinished part of your basement. When the water level in the Sump Pit reaches a certain point, the Sump Pump will automatically turn on and pump the water through another pipe that will displace the water properly.

In Nebraska, not all homes will have the need for a Sump Pump. Those that do, have one for one or a combination of the following reasons:

• The water table below your home is high enough to reach your basement when it rains
• Your home was built in a valley/in a flood-prone area
• The land is improperly graded away from your house
• Your decks, patios, driveway, etc. is improperly graded away from your house
• Your gutters are not adequate/are malfunctioning

These scenarios allow for water accumulation along the sides of your basement, which will eventually lead to seepage, with a possibility of collapsing the basement wall(s) entirely. Seepage alone creates issues of mold and mildew, and will ruin your insulation and drywall.

If your home is built on top of a hill, has properly graded land, pavement, decks, etc. and has properly functioning gutters, you may have no need for a Sump Pump. However, for those who do have one, most insurance companies offer a Sump Pump coverage endorsement that will protect you if your Sump Pump were to fail. Some of these endorsements include coverage for collapse because of a malfunctioning Sump Pump as well. Note that no Homeowner’s insurance policy comes with Sump Pump coverage as a standard coverage.

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

The Ins and Outs of Other Structure Coverage

Your Homeowner's policy has Other Structure coverage automatically included. It covers the various buildings on your property that are detached from the house, but is it enough? How is Other Structures coverage determined? Are there any exceptions to the coverage?

Other Structure coverage, like most insurance terms, is very unimaginative in its name. It covers most Other Structures or buildings on your property, most likely being a detached garage or shed(s).  It is an extension of your main building coverage (Coverage A). The amount of Other Structure coverage you have is almost never calculated as a set amount. Instead, your insurer will typically use 10% of your main dwelling coverage (Coverage A) to find the amount for it (Coverage B). So, if you home is covered at $150,000, you would have an automatic $15,000 of coverage for Other Structures. The amount of Other Structure coverage can typically be increased (for a fee), and the coverage covers all the buildings on your property that are separate from you home, up to the designated amount for Other Structures.

The caveat to Other Structure coverage is in the use of the building. If the main use of the shed/detached garage/etc. is for business purposes, then the Homeowner’s policy will not cover it. A standard Homeowner’s policy will typically cover approximately $1,000 of Business Personal Property you have on the premises of your home, but it will not cover a building that is used primarily for business purposes.

To illustrate this, an easy example would be a contractor: the contractor uses his detached garage exclusively to store his work truck and tools. To have these properly covered, the auto would need to be on a Commercial Auto policy, and the detached garage and tools would need to be insured as business property on a Commercial Property policy. (Note: come claim time, if there was a mix of business and personal items in a separate building from the home, it would take debating by the insurer and adjuster to determine what is and isn’t covered. Please talk to your agent if a situation like this is currently occurring, especially if you are running any type of business out of your home.)

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Riders & Endorsements: Modifying Your Coverage

Two insurance-jargon staples for Homeowner's insurance are Endorsements and Riders, but what do they mean? What does it mean to have a ‘standard’ or ‘non-Endorsed’ policy? What does an 'Endorsed' policy mean?

The ‘standard’ or ‘non-Endorsed’ Homeowner’s policy is the basic, unchanged Homeowner’s policy. This ‘standard’ policy generally is set by the Insurance Services Office (ISO) who makes template policy language for all types of insurance (Homeowner’s, Auto, Commercial, etc). These template policies are then used by actual insurance companies. Some companies use them verbatim, while other companies add or subtract things to change the ‘base’ coverage. However, there are some things that are never included in the ‘base’ form, such as water damages and earthquakes. These and other perils can be insured by separate policies or policy Riders/Endorsements.

Endorsements and Riders are related insurance terms, as both change your standard policy. The difference is that a Rider typically refers to an added coverage to your policy, while an endorsement can be made to add or subtract coverage, or just to change an address or add/subtract a mortgage holder. Either way, if a policy has been changed from its original form, it will then be referred to as an 'Endorsed' policy, and if your policy is referred to as an ‘Endorsed' policy, that typically means that it has added coverages that the ‘base’ policy doesn’t have. An example could be a policy that has Sump Pump Backup coverage added to it. In this case, the Sump Pump Backup coverage would be an example of a Rider, but the policy would be referred to as an 'Endorsed' policy. 

Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.

Personal Injury, the Internet, and You

Everyone knows that if you hurt someone or destroy someone’s property, you’ll be responsible for all the damages that occur. But what if you harm someone in a way that only impacts them mentally or financially? Is that something that can be covered by insurance? What does that have to do with the internet?

There is a category of offenses where there are damages, but neither physical damage nor bodily injury has occurred. These types of scenarios are considered to be Personal Injury offenses. This ‘grey-area’ encompasses many different scenarios, most of which are insurable by your Homeowner’s policy. Examples of insurable Personal Injury offenses, from the International Risk Management Institute (IRMI), would be false arrest, slander, libel, and invasion of privacy. In any one of these situations, you could be sued for any damages that resulted.

These offenses are insurable, but most would wonder when you would actually need that protection. As it turns out, our society’s extensive use of Twitter, Facebook, and other social media sites greatly increases our chances of invading privacy and making libelous statements. How simple would it be to give away personal information or unknowingly and incorrectly-discredit a business? While most of these offenses would be made completely accidentally, the damages are real, and it probably wouldn’t matter much to the plaintiff.  

Even more concerning, is the vicarious liability parents have for their minor-aged children. In Nebraska, your child is a minor until nineteen years of age, and as their legal guardian, you are responsible for the things they do, such as the things they say and do online. While you may never slip-up and create a personal injury scenario, you need to make sure your children won’t create one as well. Controlling your child’s actions and behaviors is fairly easy to do with most day-to-day tasks, but watching everything they do online is a lot harder. Keeping strict controls on your child’s internet access can keep you out of the courtroom.

Tips for Safe Child-Internet Use:

• Discuss what acceptable online-behavior is.
• Establish safe and trusted sites that they can visit.
• Monitor their computer's internet history.
• Demand usernames and passwords for all online accounts.
• Be ‘friends’ or ‘followers’ with your children that are on social networks.
• If your child has a ‘smartphone’, internet use can be found on your monthly statements.
• All devices store internet history, even tablets and small gadgets, so they can be monitored as well.
• Turn off the Wi-Fi or change the password at the child’s bedtime.

   Note from the Author (Nov. 14, 2014): After two years of work, we've entirely redesigned our website! Using SquareSpace, we were able to import this blog and we are continuing our blog there. To find the current version of this article and our new articles, click HERE.