Insurance Coverage Comparisons When Shopping For Insurance
Posted on September 16, 2014 by admin
Insurance Coverage Comparisons When Shopping For Insurance
Welcome back again everyone. You know – last week we were talking about the basics of shopping for insurance and the tragic mistakes that are made right off the bat before people even get started.
Well what I wanted to do this week as a continuation of that series, was go over a couple issues with just different things that you do in your life and how the coverages might work or whether you even have policies to address those risks.
So the first thing I wanted to share with you. I happened to notice an older article from an insurance journal magazine that was from 2011. So I wanted to check on something and here is what the article says. Well just a little excerpt from it. “$10 million dollars”; now before I go any further that ought to scare all of you, because if I ask everyone listening and watching, “How much coverage do you have?” And again now we use that term loosely. But when I say, “How much coverage do you have?” I bet many of you aren’t going to say $10 million dollars. So that number ought to scare you right off.
But here’s the case. “An amount sought by the family of a comatose cyclist”; so this is a bicyclist who got hit and it was an elderly driver of a car that struck him in Maryland. And the names are Nathan Krasnopoler, K-R-A-S-N-O-P-O-L-E-R and he was 20 at the time it appears; an undergraduate student at John Hopkins University. So Johns Hopkins University means probably pretty bright kid, bright future ahead of him.
And they alleged that this 83 year old Janet Marie Walke, W-A-L-K-E, had hit the cyclist. And it turns out they, I looked it up online now to see what ended up happening on that case. And as it turns out they settled. And it says they settled for an amount that’s not able to be disclosed but it was a substantial amount. So we’re not going to guess here. What we’re going to say is– a law suit was presented against this 83 year old for 10 million dollars.
Now folks listen, one of the very reasons we’re willing to slide those dollars across the desk to transfer our risk of liability to an insurance company is so that we don’t lose everything that took a lifetime for us to build and accumulate in one moment of an accident; or mistake; or mishap; or even weather related on a home let’s say, mine subsidence. So we’re willing to pay money to transfer risks of liability that we can’t asume or absorb all on our own.
So imagine you live 70 and 80 years accident free and then this happens. $10 million and a whole life accumulated assets are now put at risk. Do you have enough insurance? That’s the question. So when we first shop for insurance, and I’m back to this mistakes in shopping for insurance – “Apples to Apples”; “Apples to Apples”; “Apples to Apples”; if you’ve done that your whole life, if this 83 year old or any 80 year old had done that their whole life; and saying, “Hey I’m not driving that much anymore I don’t need as much coverage just quote me apples to apples”; and they’re still quoting on coverage that was presented to them when they were 20 and 30 years old. And everybody, they’ve ever only allowed anyone to quote apples for apples; for the rest of their lives, they might still have their coverage limits that they had when they were still way back when they didn’t have any assets to speak of. And meanwhile they may have 401k’s in retirement accounts, a home and all these different assets now, that they don’t want put at risk. And they’ve never increased or modified, enhance, improved, upgraded whatever you want to call it, their policy protection.
They might have retirement benefits, pensions, who knows? So folks listen, use common sense here. These limits on today’s lawsuits are way higher than they were 30 years ago. Are your coverages? If you’re still quoting apples to apples, or trying to, actually the mistake is, you’re trying to do it on your own. You’re trying to compare apples to apples or go on the internet or quote on your insurance, you’re trying to do it on your own.
If you get skilled professionals in every area of your life – A qualified certified public accountant; qualified attorneys for your legal representation, for your wills, for your living trust, if that’s what you choose; for your charitable planning; for your legacy planning. You have skilled financial advisors, skilled life insurance professionals. Get someone or a group as a team around you to advise you and make sure that your greatest concerns financially – because this show is All Things Financial – we can’t solve everything folks; but your greatest concerns financially are being put in the hands of the highest credentialed and qualified professionals to handle each area for you and with you.
So I don’t want your professionals making decisions for you folks. I want the professionals being guides and assistants making good decisions with you, and helping you as the final determinant and decision maker. Helping you make the best decisions, equip you with information to make the best decisions possible for yourselves. That goes for your business owners that goes for you individuals.
So the number one test when you’re shopping for insurance is, “Are my limits adequate?” there is no right answer to that. Everybody’s circumstances and situations are different. One person needs one set of limits that they’re comfortable with and can afford and the very next-door neighbor has a totally different set of circumstances and might choose to structure and build an insurance portfolio of far different limits.
So I bring up this one case because any one occurrence could wipe everything out. Take this very seriously. Okay I wanted to share that with you.
Now let me share some areas that you don’t think about. When you go on vacation and you rent a boat, or a Jet Ski are you covered? When you rent a car are you covered? If you own a boat? So here’s what I wanted to point out. There are some differences when you have car insurance and if you own a boat have boat insurance. So you’ll be thinking I have coverage, I’ll shop for it the same way, or I have collector cars, or I have motorcycles, or I have recreational vehicles, or I have quads or snow mobiles. Whatever it is, each carries with it their own set of circumstances and risks.
So what I want you to do, I want you to first see things that are different and unique to these set of circumstances. Let’s talk about boats. Are people on your boat covered? You don’t have to know the answers folks to the questions I raise, you have to know the questions. You have to write down the questions that I’m giving you. And then ask the agents that you have. So you don’t have to answer me.
If I say, “Are your passengers covered? Is anyone else covered? Is their personal property covered?” You know you’ll get people coming on your boat. They bring their cell phones and they bring their radios and they bring their fishing tackle. Can be very expensive! Goes overboard; are you liable for that? Are they liable for that? Are you covered for that? Are they covered for that?
Folks you don’t have to know the answers to these questions, you have to know the questions. Now what do you do with the questions? You ask your agent. You go to the agent. You say, “I have some questions that I saw on a video and I heard over the radio, I never thought to ask you, am I covered for this? So I want you to think next time you’re out on your boat, what could go wrong. “Hmm I wonder what could go wrong. My boat leaked; somebody got hurt; I had a skier on the back”. Whatever it is, write the things down that scare you most and just ask the question the next week. Call the agent.
Other coverage options are available on boat policies that aren’t available on car policies. Like mechanical breakdown – if the outboard or inboard, the mechanical breakdown, there’s coverage for that in some policies and other policies not. How about fishing equipment that you have on the boat? Radar, sonar, whatever it is that you have especially on the pass boats and all. Are they covered or do you have to specifically tell the insurance company you have that equipment to get it covered.
And folks out of a hundred people listening and watching this show, maybe 5 will call the agent and be told you’re not covered for those but then you called. Maybe the other 95 are covered, doesn’t matter, if this show helps anybody then it helps everybody. Now did you know there are discounts on boat policies that are different than car insurance? So you think if I have a good record. Our ages are good we’re over 30 years old, etcetera, our credit’s good, we’re going to get good boat insurance rates too for the same discount.
But get this, how about account rounding; educational credit for boater safety courses? How about equipment discounts for having safety equipment on the about? How about taking advantage of any of these savings that you didn’t know to ask for that you might be missing out on simply because you didn’t know to ask for the discounts? So I wanted to share that with you.
How about recreational vehicle insurance? When we have recreational vehicle insurance we have the same thing in unique circumstances, but here is what we have different – There is a lot of equipment in recreational vehicles that aren’t in normal cars and aren’t on normal boats. And I mean refrigerators, stoves, couches, cabinets; when we think of those recreational vehicles we might be to the extent of driving a house down the road. And a question has to be, if all of that equipment in this boat gets damaged or the whole thing gets stolen am I covered for that? So folks – write it down.
Now what about if it’s a trailer and it’s a recreational vehicle but its not self-propelled and you have it hooked onto your car, is it covered? Hey folks, that’s a good question. A lot of people say, “Oh yeah if I have it hooked unto my car it’s covered”. A lot of people say, “I don’t know”. Some people say I don’t have it insured maybe it’s not covered.
And my next question would be, “Well while it’s hooked unto your car or your truck, while you’re driving down the road if you have an accident in your truck are you covered?”
“Well yes I have my truck covered”. You’ll say, “I have my liability covered so that if I had anyone else or anything else I have coverage for that”. Then I’ll ask you, “How much coverage?” And then we get into another whole discussion.
But when we’re trailing something, we didn’t know you were trailing it as an agent. You hooked it on there but you didn’t tell anybody. And you swung wide and it came off or you swung wide and hit a parked car or someone that you didn’t see as you were backing up. Now are you covered? I’m not asking if the trailer’s covered or the boat that you’re hauling; I’m asking are you covered for the liability while it’s hooked unto your vehicle?
Folks, ask the questions. Write them down; that’s the purpose for this show; and then ask the questions. So you’re going to ask all of that and then if so what are the limits. Because if your run somebody over and you’re $100,000 bodily injury limit is the maximum, you might get a little unnerved. So you’re going to want to talk about some optional coverages on some of these areas.
Now recreational units, again with all of this equipment you can usually endorse let’s say a motor home or a mobile home. And you can endorse all this extra equipment and awnings and things like that. A motor home is typically portable, not parked in any one place at one time. Where a mobile home many times is skirted; it’s stationery for years and years sometimes. And it’s more like a stationery residence than it is a motor home. And definitely not a mobile home equals a motor home as you can see. So the coverages are going to probably be very different, and you’re going to want to make sure you have the right coverages in line with your needs, especially when you’re away.
So you say, “I have a mobile home at my camp” or “that is my camp”. And the agent, you don’t know how to ask the agent or even talk to them about – is it my primary residence or is it seasonal. So you go back up the next summer or winter and rodent damage tore through the motor home or mobile home and you say, “Oh boy I better call my insurance agent”.
Well you sure want to hear the answer, “Yes you’re covered for that”. You don’t want to hear the answer, “Oh no you’re not covered for that we didn’t know it was stationery”; or “we didn’t know it was only seasonal”; or “we didn’t know this or we didn’t know that”. You don’t need to find those things out after a claim. So I wanted to point that out to you; there’s special coverages that you might not even know to get.
Now how about this? While you’re units in storage or again, in the winter but even in storage what about freezing water supply in the holding tank; or vandalism? So you’re going to want to check on those coverages ’cause that’s different than your normal car insurance deeds as you can see.
Here’s another area you definitely want to be looking at in your own policy or asking the agent. Most car insurance policies, the physical damage coverage covering the car itself is called Comprehensive and Collision. And its normal settled on an actual cash value basis otherwise known as ACV. And you’ll be able to see that on many policies. It’ll just say the deductible, one thousands, ACV minus $1,000; ACV minus $500. That just means they’re going to depreciate the vehicle or we’ll use what we customarily refer to as the Blue Book Value.
You know it’s not really the Blue Book value but we still call it that. But it communicates it’s what your car will be worth if you traded it in or sold it on a retail market which are 2 different numbers, or maybe an average of those. So that’s an actual cash value would be all you would receive on a car insurance policy.
Well when you have a boat or a recreational vehicle one option you can buy is market value. That’s what your individual motor home; mobile home; boat might be able to get on the market. So that’s market value as different than Actual Cash Value which is described as replacement cost minus depreciation. Commonly we call that the Blue Book Value but it’s not by pure definition really a blue book value.
So you have the Blue Book Value, you have the ACV, the Actual Cash Value which is replacement cost minus depreciation. Then on a motor home and a mobile home, some of these recreation vehicles you also have another option you can buy unlike a car insurance policy, which is Total Loss Replacement Coverage.
Now again you can do this on collector vehicles, collector cars. And we’ve done that a lot on the collector car policies. Interestingly enough, collector car policy coverage is a lot less expensive than regular car coverage. And here we’re able to buy Replacement Cost versus Actual Cash Value or Depreciated Value. So there are a number of things you can buy on your recreational vehicle policies I wanted to make you aware of – as opposed to just buying a standard off the shelf, as I’ll refer to it, recreational vehicle policy. And assuming that you have all that you need can be very inexpensive to make some of these very valuable and great differences in the value on which you’re insured. Get the right coverage – can be very, very, inexpensive maybe even almost the same premium you were paying unknowingly without having those coverages.
Okay let’s take a quick break and we’ll be right back.
Okay welcome back. Now before the break remember I started talking about on the recreational vehicles, the different types of coverages that you can choose – Actual Cash Value, Blue Book Value we might call it; Red Book Value whatever they want to call it. Its depreciation probably the lowest value you could receive if someone stole your RV.
Market Value is the second one I touched on; what it would actually bring in the market at that time. The third option that sometimes available on an RV policy for purchase is Agreed Value Coverage. Now what that is, is a coverage that the policy holder and the insurance company actually agree an amount in advance, on an amount that they’ll pay you at the time of the claim. So you’re buying a limit when it’s purchased but it’s actually an agreed limit at the time of the claim what you’d be paid without haggling. That’s an Agreed Value or Agreed Amount Coverage.
You know I think the insurance agents for those of you who have these RV policies, classic car policies. You know Classic Car Policies aren’t all the same. You look at different companies and you say this company’s more expensive than that. Without getting the policy booklets out not just the declaration pages you don’t know why it’s more expensive.
Again my evaluation of more expensive cars versus less expensive cars – A Mercedes for example versus a Kia; there’s a reason the cost is different. It doesn’t make one of the cars better than the other but it makes them different. There’s a difference. And their differences are sometimes worth paying for, and sometimes in other cases not worth paying for – depends on your budget and your personal situation and circumstances. It is the same for insurance.
Some people want the best attorneys, the best legal representation so they’re hiring the best partner which might be a multi-national insurance company. And another person might say I don’t care I just want a small regional firm that probably has to sub out the attorney work; the claims representatives using an independent claims firm. But at least go into that with your eyes open and know that you’re getting a difference, not thinking, “I got exactly the same thing as I had before”.
When you’re first shopping for coverage get a skilled professional to help you analyze even when we get to these recreational vehicle policies. If you talk to someone who only handles one company – the contract with that company and the policy booklet is what you’re going to get. You might be able to ask them are they’re coverage enhancements with that company but you certainly can’t ask them, “How about the others are there 5 other companies that are dominant in this industry also and can you help me find the best one for my personal needs?” So that’s why I recommend the independent agent as being the representative of choice to help you shop for your insurance companies rather than you trying to do it for yourself and on your own.
Alright folks, we’re again out of time. When we come back I’ll probably continue this discussion because I keep running out of time and there’s so much more I want to get to you about helping you comparing your insurance and being able to get the best packages available. So we’re out of time. We’ll be back again next and thanks for tuning in.