Now this is a fun topic and one that really needs to be discussed in great detail and quite frankly should be discussed by your insurance agent with you on an annual basis!
Bodily Injury and Property Damage Liability is by far the one area that 99% of the people I speak with on a daily basis discussing insurance options is completely under insured with respect to their auto insurance policies!! Why, you may ask? Liability is one of those nasty little responsibilities that it really doesn’t matter what you have today when you are liable for damages to somebody else, it matters how much you will have over your lifetime. For example, you’re in an automobile accident and you cause more injury than you have insurance for; you are liable for everything above and beyond that amount!! Even if you can’t pay it! Now some usually say you can’t get blood from a turnip but the truth of the matter is when it comes to liability they really can! Your house, your paycheck for the rest of your working life, the assets in your home, etc.. can all become part of a liability claim.
Now then, since I have your attention lets discuss what this coverage does and how to determine how much you have. This coverage compensates persons who claim that they were injured or suffered property damage because of the ownership, maintenance, or use of your insured auto(s), up to the limit selected on your policy. Typically this coverage is written something like 25/50/10 which is the Washington State minimum coverage $25,000 bodily injury / $50,000 per occurrence / $10,000 property damage.
Lets talk about that a little further, the state minimum coverage is entirely too low for virtually everybody on the road and is really only intended to help give a buffer to you should you cause an accident. Realistically $25k in coverage isn’t near enough for any accident that causes bodily injury especially if there is a loss of life or limb! The per occurrence portion is how much they will cover in an accident so in the example above that will cover 2 people at the maximum amount of $25k; what if there are 3 people injured in the other car? Well, then you take the $50k and divide it by 3 and now you have coverage for up to $16,666 per person if you were to spread it evenly (example purposes only).
Now onto the property damage amount of $10k in the example… this is the amount they will pay up to for property damage (building, pole, fence, other car, etc.). How many cars on the road are worth $10k or less? I wouldn’t recommend carrying less than $100,000 in property damage and your bodily injury should be more like $250k/$500k.
As you can see bodily injury and property damage liability is one of the most important coverages in your auto policy. When making a decision regarding how much is right for you it is crucial to discuss your options with your insurance agent including your personal exposures such as being a family chauffeur for other people’s children to the soccer game or discussing your personal assets and how to ensure they are adequately covered should the unexpected happen to you.
Liability coverage, now this is a huge topic and one that I will have to tackle in several posts over the life of this blog..
To begin lets start by asking where does your liability stop?
- When you are walking down the street?
- When you get out of your car at the local shopping center?
- How about if you are playing golf and accidentally hit somebody with your golf ball?
- What if a tree from your property lands on your neighbors car?
Any thoughts? Well the answer is your liability never ends, it goes everywhere you go! However, that doesn’t mean that your homeowners policy will cover in all of those circumstances, your specific coverage will be detailed in your policy jacket.
Generally speaking, your liability portion of your homeowners policy will provide coverage for your liability up to the limit outlined on the declarations page in almost every circumstance except when your driving a vehicle and without a business endorsement it usually wont extend coverage to any business being conducted out of your home. Keep in mind that this is a general answer and doesn’t apply to all home owners insurance policies.
For more information regarding this coverage, feel free to schedule a review of your insurance policy by calling 888-568-HUNT (4868).
Wow, this time of year can be so busy. The season starts changing on us rapidly, the cold starts rushing in; if you live up here in Washington State then that means the rain starts coming too! Leaves start changing, the holiday hustle seems to come out of no where, plans start being made for trick or treating, Thanksgiving, and Christmas. I don’t know about you but the 4th quarter seems to sneak up on me more and more as the years go by!
This time of year for those of us in the insurance industry is generally our most active in regards to claims. As the weather gets cooler, wetter, and the amount of daylight decreases it only seems fitting we would discuss the coverage that is generally extremely important during this time of year. That coverage is non other than loss of use. This coverage is usually the portion that I typically see on a competitors home owners policy that is too low. So what is this coverage?
Loss of use is essentially coverage for you and your loved ones that helps make the transition of a claim easier, this coverage is what steps in when that pipe breaks in your kitchen and all of your cabinets and flooring has to be removed, a tree from your neighbor’s house snaps and comes crashing through your roof or whatever covered loss decides to come knocking on your door making a portion or all of your home unable to be used.
Loss of use steps in after the claim has been filed to help offset the increased cost due to the covered loss occurring. For example, if you were unable to stay in your home this coverage would set up a temporary living arrangement (such as a hotel) for you and your family to stay at while the insurance company processes your claim and begins to put your house back in order. This coverage can also help offset your increased food bill; if you have ever tried living in a hotel you will notice that the little refrigerator they give you doesn’t really hold much and you will either be shopping more often or eat out more frequently than you may be accustomed too, oh yeah and did I mention you still have to pay your mortgage, utility bills, etc. Have you ever noticed that those unexpected bills, or the need to spend more than you had planned never seems to come at a convenient time? Well, if you have a covered loss, and your insurance agent designed a policy just right for your family, this is not a worry you need to carry with you!
But Graham, how do I know if I have enough loss of use coverage? Well, I thought you would never ask!
A good rule of thumb would be to take your monthly rent or mortgage payment and multiply it by 12, if you have close to this amount or more than this chances are you are pretty well covered. If not, it’s time to make that call and find out how to fix it before you have a claim. So why should I multiply it by 12? Chances are you could be out of your home for 12 months depending on the severity of the loss, and what I have found by experience is that this number is very close to what you may end up spending per month in additional expenses. This formula isn’t perfect and shouldn’t be used as your only way of determining what amount is right for you, but it is a good starting point.
That’s it for this week, thank you for reading! Have a suggestion for a future topic? Please comment and let us know your thoughts and or suggestions.
Hunt Family Insurance Agency – 888-568-HUNT (4868)
Now that we have covered protecting your dwelling what happens to all of the stuff inside it? Great question!
Your homeowners policy has coverage for protecting your stuff, I mean lets face it what would we do without our XBox or PlayStation’s right! Okay, all joking aside let’s discuss how your personal property is covered by first defining what personal property is; to do so I am going to need your imagination a little bit.
Let’s imagine you pick up your house, take the roof off, turn it over and give it a good shake. Everything that falls out of your home, including your appliances, dishes, furniture, etc. is considered your personal property. However in most cases this does not include your car so take it out of the garage before you flip the house over and shake out all of your stuff! We will discuss auto policy coverage in another post at a later date.
Now that you have a good idea on just what personal property coverage is, let’s discuss some of its limitations. Most policies, at least in Washington State, limit your personal property coverage in certain areas such as cash, guns, computers, and jewelry. There are often times also limitations on what your personal property can cover for business use too; ever take home a company laptop? You could be financially responsible for replacing it should something happen to it when not at work and your policy may limit you on what they will cover if you don’t have an endorsement for this type of scenario. It is also important to note that your policy may have other limitations and it is important to discuss them with your agent as soon as possible! Don’t wait till the last-minute only to find out you didn’t have coverage.
Did you know that your homeowners policy covers your personal property even when it isn’t at home? It’s true, depending your homeowners policy and the company it is written through, you may have coverage for items when traveling abroad, items you currently have in storage at a storage facility, or even if it was taken from your car!
If you have questions regarding this type of coverage, discuss it with your agent or feel free to call us toll-free at 1-888-568-HUNT (4868).
Hunt Family Insurance Agency, Inc.
Okay, so we have discussed the dwelling coverage listed on your homeowners declarations policy now we move onto separate structures.
Separate Structures coverage is usually 10% of the dwelling amount but it can be increased and in some types of policies reduced or removed it just depends on the type of policy and the insurance provider. One of the most common questions I am asked when going through the coverage on a homeowners policy is: “Why do I need to have coverage for separate structures on my policy?” Generally this is asked when a homeowner doesn’t have any other structures (buildings) on their property. However, Separate Structures actually covers more than just other buildings and can often times be confused as coverage for another building simply because of the name. For example, this coverage could also be used to cover a fence on the property, a greenhouse, a shed, etc. It doesn’t however cover decorative items in your yard such as water fountains, bird baths, gnomes, or those fancy pink flamingo’s, etc. this would most likely be covered under the Personal Property section of the homeowners policy which we will discuss in our post next week.
Hunt Family Insurance Agency 1-888-568-HUNT
The first line in your declarations page or the quote you receive from an insurance provider will most likely be Dwelling.
Dwelling is probably the simplest portion of your policy but if overlooked this coverage could cost you a fortune! To put it simply, if you experienced a total loss of your home due to a covered peril (i.e. Fire) this would be the amount the insurance company would pay to rebuild your home from the ground or foundation up and may include other costs such as debris removal. Please note the word rebuild, this coverage in most circumstances does not mean buy another home.
However, most of the time the amount of coverage requested is the purchase price of the home. Using the purchase price of a home is never a good idea, though in some markets due to the market conditions the reconstruction cost of their home may be fairly close to the market value. I should also point out here that there are two types of valuation methods used on home policies, Actual Cash Value (ACV) and Replacement Cost (RC). This is important when comparing insurance policies and in today’s market RC is the most common, but you will still find some ACV policies out there, it just depends on the type of policy and who it is written through.
There are several methods and companies that can help with estimating the replacement cost of your home, just ask your insurance agent how the amount on your policy was determined at your next annual review. If you don’t think you have enough or are unsure, don’t wait call and find out today.