Protect your home: 5 tips in checking home insurance

MANILA - When Tropical Storm Ondoy caused huge floods across Metro Manila in 2010, many homes were submerged underwater, resulting in untold damage. Amid the destruction, some of the affected owners found comfort in the knowledge that they had taken out insurance on their property--only to find out a few weeks later that their insurance did not cover such an incident.

And why not? Because their insurance policies did not include damage resulting from floods.

Until this happened, majority of consumers were not aware that flood insurance was not included in their policies. Most home insurance policies contain an exclusion case for damage caused by “acts of God.” This term pertains to any act of nature that may not be controlled, including earthquakes, war, mobs, and many others.

To ensure that you do not encounter any problems when claiming insurance, here are some tips to guide you:

1. Educate yourself about your current insurance coverage.

Read your homeowner’s insurance policy carefully, and be aware of what exactly it covers. It is important to know if your policy contains an exclusion. If you find out that your policy excludes damage resulting from storms and floods, ask how you can have additional coverage for this risk. Think of possible scenarios and ask all sorts of questions: If your roof leaks as a result of a storm, and water seeps in, damaging your appliances, will this be covered by your policy? It is essential to know these things before they happen, rather than argue about them after the fact.

2. Carefully assess your needs.

The need for specific coverage varies per individual—those living on the 30th floor of a high-rise would most likely not be concerned about flood insurance, but those in subdivisions near creeks or known flood-prone areas might find this extremely useful. Based on your assessment, ask your insurance agent about what products they may have that specifically address your need.

3. Shop for riders that you think will be useful or will give you greater peace of mind.

Some that may be of interest include:

a. Personal property: This covers expensive items such as jewelry, art, and the like inside your house.

b. Flood insurance: This will cover damage resulting from floods.

c. Replacement cost (contents): This rider ensures that there will be no depreciation for the personal property you must replace due to theft or damage.

d. Guaranteed replacement cost : With this rider, the insurance company will replace your home or car with another of the same value, even if the cost is higher than that listed in your policy.

4. Adjust the amount of your coverage to reflect your current needs.

Look at the amount of coverage you have to ensure that there are no so-called protection gaps. It is possible that you have automatically renewed your policy without adjusting the amount of coverage in the past ten years. If you took out a home insurance for P1 million ten years ago, and you find yourself claiming for damages, you might be surprised to see how little your existing policy can cover. Consider engaging the services of an appraiser to know how much coverage you should get.

5. Keep your policy updated.

The only thing worse than not having enough coverage is to find out you cannot file for insurance because your policy has lapsed. This is a really a rudimentary thing, but it is quite surprising how people frequently forget about keeping their insurance policies active, only discovering too late that it has lapsed. Use reminder functions on your calendar or use apps to remind you of upcoming deadlines.

Be proactive in ensuring that you have adequate protection by looking into the details which can spell all the difference for you when you need it most.

source: www.abs-cbnnews.com

Protecting your income: How much life insurance do you need?

MANILA, Philippines - At one point or another, you've probably been approached by an insurance specialist offering products designed to protect you and your family.

Before making a choice, a good question to ask would be if you actually need one. Life insurance is something that is usually paid out upon your demise to answer for the needs of your dependents, as well as cover debts you have left behind and even funeral expenses.

Following this logic, those without any dependents and those without any debts may not have a need for it. Remember, though, that your needs change over time. You may not have dependents or you may have no debt now, but how sure are you about how things will be ten years down the road?

If you have dependents, then there is no question about it: you definitely need life insurance.

Note that there are two kinds of products offered by insurance companies: whole and term insurance. Whole life insurance is in force for the lifetime of the insured and needs to be paid yearly. In the Philippines, arrangements are often made for the policy to be paid up in a number of years.

Term insurance, on the other hand, covers you for a specific period — from a year to up to 5 or 10 years. Think of it as something like car insurance. Once it lapses, you will need to get a new one or your coverage expires. Since its coverage is much shorter and is defined, it is much cheaper than whole life insurance.

One thing to remember about insurance is that it is much cheaper to get when you are much younger. If you’re 25 years old, you will be paying far less insurance premium for the same coverage than a 45-year old. For this reason, you may consider purchasing insurance even if you are still without any dependents.

If you have decided that it is time to get insurance, your initial question would most likely be how much insurance you should get and which of the variants out in the market will be best for you.

The amount of insurance that each person needs is an individual matter — what person A needs is different from that of person B. You will have to do an honest assessment of your current needs and project your future requirements to come up with an estimate of how much insurance cover you should get.

A simple way to do this is to look at your monthly expenses. List down everything that you have to pay for — food, utility expenses, household expenses, children’s tuition expenses, transportation, entertainment expenses, dues, rent, and amortizations. Assume that your monthly expenses come out to, let’s say, P30,000. That is the amount that your insurance will have to cover on a monthly basis. In other words, your family will need at least P360,000 a year in the event of your demise.

Most experts say that you will need insurance coverage of at least 10-12 times your annual earnings. This should provide for all your liabilities and represents your future earning potential.

If, in the above example, your expenses equals your earnings, then you will need insurance coverage of at least P3.6 million. Theoretically, this amount should, if invested, fetch a regular income for the surviving members of your family so that they are able to maintain their current lifestyle. More specifically, if the P3.6 million is invested, then it should fetch an amount that can tide your family, until the time comes when they are financially self-sufficient. Assume that this amount will earn 10% per annum, or P360,000 a year. This should be sufficient protection for your family.

Note, however, that your lifestyle will change as years pass. In all likelihood, your cost of living will go up as your family grows and as your income increases. This means that you should revisit your insurance coverage regularly to know if it is still realistically enough to cover your needs. Do this every time there is a life change — when you marry, when a new kid is born, when you have acquired property. In fact, do this every year as a matter of habit.

Remember to consult with financial experts in determining your insurance needs as well as in assessing your financial status. By constantly evaluating your financial status, you will be more enlightened on your needs as they change throughout your life.

source: www.abs-cbnnews.com

3 Reasons to Review Your Insurance Coverage ASAP

The typical consumer shops around for insurance when they first need it, such as when they purchase a house or vehicle. After that, preliminary research into various kinds of coverage, pricing, and insurance product packages tends to be more of a passive strategy. When it’s time to pay the premiums or file for a claim they may reconsider the terms of their coverage, but otherwise they just hang on to the same insurance policy year after year without giving it much thought or attention.

As a result, millions of people wind up paying too much for their insurance or they buy policies that don’t provide them with adequate coverage. Only when an accident happens or tragedy strikes do they find out that the insurance they’ve had for all those years was not exactly appropriate or that it was seriously out of date and not in-synch with their current needs and lifestyle.

Let’s look at three key reasons why everyone should monitor their insurance, at least on an annual or twice-per-year basis, in order to avoid unpleasant surprises and unnecessary costs.

#1  Replacement Value vs. Actual Value

First of all, you need to know the relationship between your coverage and the value of what you want to protect. You need to understand whether your policy reimburses Replacement Cost Value (RCV) or Actual Cash Value (ACV) in order to determine that. The following should help:

    RCV provides replacement of lost or damaged goods with comparable items at current market value. ACV, on the other hand, provides compensation based on the depreciated value of those items. In other words, it’s what the item is worth after wear and tear and loss of market value over time has been factored into the equation.



    If you insure your outdoor kitchen when you install it, for example, and five years later you file a claim after it is destroyed by fire, RCV coverage should provide enough money to replace it with a similar one.



    ACV coverage, by contrast, would subtract or depreciate the amount the kitchen has lost in value over the past five years and then give you that significantly smaller amount. Considering the fact that construction materials and labor costs are constantly raising, you may wind up with only a fraction of what you need to actually rebuild and replace that facility.

The advantage of RCV is that coverage allows for full replacement of damaged or lost items, and the downside is that this kind of coverage will normally cost more than ACV insurance. If you want to save money, buy a policy that offers ACV coverage and if you are more concerned with protecting your assets, choose RCV.



#2  Items Not Covered

Another major pitfall many homeowners accidentally stumble into is that they incorrectly assume that their property is covered. You buy a pricey new laptop, Rolex watch, or iPhone and are confident that your existing insurance policy will cover it. Those high-ticket items are typically not covered by a standard homeowner’s policy, however, and neither are a long list of other items including fine art, gold coins, antiques, firearms, musical instruments, and many kinds of consumer electronics. Similarly, if you own a collectible automobile such as a vintage sports car, you will probably need to buy a special policy to insure it.

You need to talk to your insurance agent and tell them what items of special value you own in order to make sure your assets are adequately covered. Insurance companies will insure almost anything for a price, but you will likely need to purchase additional coverage for your most expensive and cherished possessions.

#3  Hazards Not Covered

Another kind of liability relates to your responsibilities as a homeowner, as outlined in the fine print of your rather incomprehensible insurance policy. Did you know, for instance, that if a tree falls on your house and the insurance company determines that the tree was diseased or already dead, that you may not be covered? Worse still, one of those 1,000 pound limbs could fall on your neighbor’s house or car. If the limb was rotting, however, the insurance company may say that it was your fault because you did not properly maintain the tree.

Since you did not trim those rotten limbs or cut down that weak tree, the liability may be all yours to shoulder, because you may have violated the terms of your policy related to home and property maintenance. All sorts of calamities can be uninsured if you don’t know the details of your policy. Some homeowners have been dropped by insurance companies because of the breed of dog that they own and keep around the house. Others have had their houses destroyed by fire or flooding, only to find that they lack coverage because they did not follow the rules regarding things like updated electrical wiring or building a house in a flood plain, for example.

Do an Annual Insurance Checkup

The bottom line is that you should review your coverage at least once a year. Talk to your agent or broker, and find out what deductions you qualify for and if you can save money by raising your deductibles or tweaking your coverage. Ask them specific questions to make sure you know what’s covered and what isn’t. Don’t assume that your valuable assets are protected unless it is clearly spelled out in the legal language of your current policy. Also, when insurance companies send updates to your policy, pay attention to those and review them in great detail. They may include new exclusions that will leave you underinsured.

source: everythingfinanceblog.com

Traveling Abroad Requires a Check of Laws and Insurance

Driving abroad requires of a UK driver to be educated as to the local laws. It also requires that the driver make sure their insurance is adequate. What is covered while driving within the UK may not be so when driving within another country. Insurance coverage would be of vast concern and should be reviewed before taking a trip abroad. If one finds they are not covered by their current coverage it can be as simple as taking out extra coverage or a supplemental policy to assure they have car insurance.

It is also important to look into the laws covering driving in another country. If not prepared, a driving violation or accident could be not only time consuming from one’s business trip or vacation but it could be costly as well. To help those driving in foreign countries to be more prepared, the Foreign & Commonwealth Office (FCO) has launched a campaign to inform how to be safer when driving abroad. By staying informed of local driving laws one can remain safer on the roads. The FCO reported that there have been a high number of traffic incidents involving British tourists in popular vacation spots such as Australia, Thailand, and Spain.

UK ambassador to Thailand, Mark Kent commented “Accidents do occur and not all tragedies are avoidable, but the outcome could be very different with many lives being saved and critical injuries reduced if people adopted the same safety precautions abroad that they would naturally take at home.

“I have visited hospitals here and heard from doctors how many deaths could have been avoided by following the law and taking the appropriate precautions, such as safety helmets.

“You should check that your travel insurance specifically covers you for driving a scooter or any other vehicle abroad.”

The FCO has a new online tool to properly inform drivers so they are better prepared and can be safe on the roads. The online tool can be found at www.fcowidget.com.

source: comparethebox.com

How do I Get Insurance if I no Longer Have a Car?

Question: Do you have to have insurance on a car that has been totaled and not replaced? Our insurance cancels soon and we haven't found a new car to buy. Our agent said we should keep insurance or we will be penalized when we buy insurance for the new car. Is this true? Who will sell us insurance if we do not have a car?

Answer: No, you don't have to keep insurance on a totaled-out vehicle. In fact, there is a type of coverage meant specifically for people in your situation.

After the insurance settlement is completed on a total loss claim, many insurers will cancel your policy, effective the day after the accident -- if you ask and don't already have a new vehicle to transfer the coverage to.  (See “Can you cancel your policy after an accident”)

What your agent said is correct.  Without continuous car insurance coverage on you and your husband, when you get a new vehicle to insure your rates could go up due to what insurance companies see as a gap in auto coverage.

To be considered a preferred driver, and thus be offered the best rates by most car insurance companies, you need to be continually insured with an auto insurance policy.

Being without car insurance makes you a higher risk to many insurers due to how their rating systems are set up (those with gaps typically cancel due to non-payment, or cancel on their own after getting an insurance card and thus are higher risks to insure).  In fact, some insurance companies won't offer you a policy unless you've continually had car insurance for at least six months before applying for auto insurance with them.

The non-owners policy

The insurance industry understands that there are licensed drivers without a car to insure, but who still want car insurance coverage.  For these individuals, there is non-owners car insurance coverage offered by some auto insurance providers.

Non-owners can be used as secondary liability coverage if you borrow a car while searching for your replacement vehicle or, depending upon the terms of your policy, may be primary liability coverage when renting a car.  For details about a non-owner policy, see “What is non-owners car insurance?”

A non-owner policy is relatively cheap to obtain (typically $200 - $300 a year) because it can't be purchased or used when you own a car.  If you obtain such a policy to cover you and your husband while you are without a vehicle, once you purchase your replacement vehicle you'd need to inform your car insurance company to transfer your policy to an owner's policy and give the insurer the details of the car so they could calculate your new rates.

Since your agent brought up this issue about continual coverage, and you cannot keep coverage on a totaled out vehicle, you should contact your car insurance company to see if it offers a non-owner insurance policy.  If it does not, then shop around for a carrier in your area that does offer a non-owner policy, such as Progressive.

And you don't have to stick with the same insurance company that you get a non-owners policy with.  While shopping for a new car, also shop around for how much car insurance will cost with various auto insurance providers so that you can get the cheapest car insurance rates possible for the new vehicle.  (See “Pocket $1,102 just by shopping around”)

source: foxbusiness.com