Friday, February 23, 2018

Insurance Basics for the Newly Married

Typically, an unmarried person has only minimal insurance coverage; even that is often limited to what is mandatory, such as auto insurance for purposes of legal driving. The whole picture changes once you get married. You need to be responsible for another person. There is a spouse now and a family that will grow and hence you should reconsider your insurance cover.

Even if both spouses are working, the loss of a car, a home or one income could be catastrophic. Of course, with two people involved, the risk of sickness or injury becomes much greater, no matter how healthy you are. For all these reasons and more, it becomes critical to consider the right insurance coverage in order to protect your future with your partner.

The four main areas of insurance that you should act on as soon as you get married are the following.

1 Life Insurance

You didn’t need life insurance when you were single, with no dependents to support. Now, post marriage, should you die, your spouse could be in serious financial difficulties, if your life insurance is not enough. For example, the sudden loss of income could cause a financial disaster because:

                v  both incomes are needed to pay bills.
                v  one income is not enough to cover the mortgage payments 

                v  debts and liabilities are there to be dealt with.

Life insurance will provide crucial financial security for the surviving spouse.

2 Health Insurance

Generally, there is a fixed period each year, when you can buy or change health insurance. It’s called ’open enrollment’. However, when you get married you are usually entitled to buy health insurance even if it is not ’open enrollment’ time.

The rule is that you should have 60 days to enter into a new individual health plan, or 30 days during which you can become part of your spouse’s employer-based health insurance plan. Examine how satisfied you are with the policies you both have and the costs involved.

If you find that both are satisfactory, you could continue with separate health plans. However, in many cases, both spouses being on the same policy may be more economical and helpful in reaching sooner your annual deductible.

3 Homeowners and Renters Insurance

Presume that your spouse and you both had individual renters or home insurance coverage before you got married. Now that you are married and going to live together, one of the two policies can be canceled. The retained policy will cover both spouses but the insurance company must be kept informed so that the spouse’s name can be added to the policy.

4 Auto Insurance

In a similar way, compare the individual car insurance policies you both had before marriage to find which one offers the best rates. Also, check out other insurance companies for better options available for the two of you.

Any new policy must be effective from the day an old policy ends. If this is not done, future insurance costs could be higher. Look for discounts that may be available with a multicar policy or a bundled car and homeowners policy.

Life after marriage is very different from that before. It is essential to understand the nuances of the insurance needs of a single person and those of a couple. It is even more essential to plan and cover your obligations and liabilities.

Do seek the guidance, at the earliest, of an experienced insurance professional; arrive at the right kind of protection you need at the right cost. 

Fire Risks and Home Insurance in California

According to reliable news sources, insurance companies are in the process of reclassifying high bush fire risk areas in California. The object of this exercise is to provide homeowners in the state with the information they need to understand and evaluate the risks they face from bush fires.

With this information, they will be able to make informed decisions on the actions they need to take to protect their property and belongings. While the results of reclassification may be good news for some homeowners, it may not be so for others.

Risk level of your home

Obviously, insurance companies are reluctant to issue policies in high-risk areas. If they agree to issue policies, the premiums will be rather high. Furthermore, policyholders in high-risk areas fear the prospect of cancellation of their insurance policies. This could happen of course, but no insurance company can afford to carry out unilaterally the cancellation en-mass of policies in these high-risk areas.

In order to cancel or refuse renewal of a policy, the company has to inspect first each home. The policyholder has to be provided with reasonable justification for its decision. The company must point out the problems that can increase the risk of damage or loss. In addition, policyholders will have to be given adequate time to take action to fix those problems.

Common causes for cancellation

The most common reasons for cancellation or non-renewal of insurance policies include the following.

      v  Old or poorly maintained roofs

v  Trees overhanging the roof

v  Less than 500 feet of defensible space and clearance from trees and brush

v  Poorly maintained yards

v  Plants like ivy growing on the side of the home

v  Homes that are vacant, under construction, being used for home stays by agencies like Airbnb, or rented when it is listed as owner-occupied

Your home insurability may suffer from any of the causes listed above or others. It will therefore be a good idea to take pre-emptive action to fix the issues before the insurance companies start raising them. An insurance company that is eager to offer a policy is much easier to deal with than the one that is reluctant to do so because of the inherent risks involved.

Insurance companies can refuse to renew the policy, in case the problems that increase the risks are pointed out, but not fixed by homeowners. Additionally, the companies can refuse to take on new customers in areas where they feel the risk is too high.

Knowing your real situation 

As a homeowner, you wouldn’t certainly like your insurance company’s intimation that your policy will be canceled or not renewed because of high bush fire risks. You would try your best to protect your home from those risks, and satisfy conditions that would facilitate sufficient insurance cover for your home.

It would be best to seek, at the earliest, a professional insurance agent’s expert guidance on where you stand and what you are required to do to ensure that your home stays properly insured.

Monday, January 22, 2018

New Year’s Resolutions for Homeowners

Everyone makes New Year resolutions and most relate to giving up bad habits, improving lifestyle or losing weight. In many cases, they are abandoned or forgotten in a matter of days.  As a homeowner, you should consider some resolutions that will protect your home – the fulcrum around which all future resolutions will be made. You just cannot afford to abandon or forget these issues.

Plan maintenance

No one knows your home as you do. You know what kind of repairs you need to do during the year. Sit down with a calendar and make a schedule of when you can take up the jobs and how long you need to complete them. Remember to add preparatory work, if any, before the job starts.

Have a fixed day of the month for doing all the routine maintenance chores such as replacing air filters, checking smoke alarms, cleaning out the garbage disposal and so on. Do mark the days on the calendar. If you stick to the dates and time frames, your house will surely be protected. There are quite a few apps available to help you with the scheduling.

Get smart

Home automation is no longer just a bunch of gadgets designed to make your life easier. Advanced security and energy management systems are available to maximize the safety of your home for your family to live there happily. Energy-efficient systems can cut your utility bills without making the family suffer in heat, cold or darkness. These additions will enhance the value of your home.

Go green

If you have space in your yard, you can plant trees that provide large bands of shade. The more the house is in the shade in summer, the cooler it is and the lower the air conditioning costs are. Just be careful to plant the tree where falling branches will not damage the house.

Check your insurance policy

Everything you do to your home affects its value. Lack of maintenance and high-energy use are among the things that could reduce its value. Since your house is your biggest investment, you want no doubt to protect it and increase it worth. The insurance policy you took some years ago may not reflect the repairs and improvements that have been done, which have added value to the home.

If your home is damaged or destroyed, the insurance payout may not be enough to rebuild and resume your life as it was before the disaster. Don’t forget about the purchases you have made – expensive furniture, artworks, jewelry, electronics etc.; all of them need to be included in your insurance portfolio.

Working out the amount of insurance coverage your home needs is not simple. For example, the large TV you bought last year may now cost significantly more than it did then. How much do you insure it for? Professionals can control best the cost of the policy while ensuring the protection your home and family require.

Contact an experienced insurance broker and get the guidance you need on homeowners insurance that will enable you to rebuild if the worst happens. That is one New Year resolution you cannot afford to break!

Isn’t it about Time you reviewed your Life Insurance Policy?

Life insurance may appear to be a simple matter – you pay premiums and if the ‘inevitable’ happens during the validity of the policy, the beneficiaries you have nominated will receive a lump sum payout. However, there is more to it than that. The reason for the policy is to ensure that those who are dependent on you do not suffer financially after the demise, which in itself is great suffering.

Your circumstances, as well as those of your beneficiaries, are not static – they change with time; if your life insurance policy is not modified to suit changing needs, it may not serve its purpose of providing for your dependents in the manner you want. That’s why periodic reviews of your life insurance are important and the beginning of the year is a good time to do it.

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When to modify

Any change in your life could require a modification of your insurance. When you were single you might not have needed life insurance; however, everything changes when you get married. Similarly, with the birth of each child your coverage needs to increase to protect the larger dependent family. While regular reviews are important, here are four major stages of life when you have to change your coverage.

              1.      Marriage: Even in the case of double income families, the death of a spouse does not mean that the cost of living is halved and a single income will be adequate. There ARE various expenses to meet, debts to pay off, investments that cannot be abandoned and commitments that must be kept. Your life insurance should always reflect these demands and the coverage should be enough to meet them. 

             2.      Children: Children are often the biggest reason for life insurance. After birth, it takes more than 20 years for them to be financially independent. During that time, the world would have undergone many changes and you need to guide them through proactive education and provide a worthwhile base for their life.  Planning for their future in general terms will not be enough. As they grow older and their path in life becomes clear, your insurance cushion must be enough for them to pursue that path even if you are not there.
             3.      The empty nest: When the children have moved out, and started their own lives, you may be able to modify your coverage, as they are no longer dependent on you. However, keep your spouse’s needs in mind and consider the role that life insurance can play in estate planning.

              4.    Retirement: Your income will change on retirement and that could require some changes in your coverage and the premiums you pay. Your insurance needs to be enough to care for your spouse and cover any obligations or debts that you may have.

A balancing act

It is not easy indeed to find the optimum balance between what you can afford to pay for life insurance and the coverage that you need. That balancing act has to be performed, keeping in mind likely changes over time. Even if you were lucky to face no major changes, small things too can add up and have an impact on your life insurance needs.

It would be best to seek the help of an experienced insurance agent to review your changing income and the changing needs and work out the right insurance for each stage of your life. 

Friday, December 22, 2017

The Tragedy of the Under-Insured

Hundreds of Californians who lost their homes in the recent wildfires are depending on their insurance policies to help them rebuild their lives. In many cases, the payout will be smooth and the amount will be enough to cover the reconstruction costs. However, for others, there could be a rude awakening. 

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The Under-Insurance Problem

Studies show that a shocking 60% of homes in America are under-insured. The average shortfall is in the range of 20%. It is naturally tempting to reduce insurance premiums so that the money saved can be spent elsewhere. And 20% does not seem like a huge difference – the gap can always be covered if the need arises. However, thinking this way is a mistake. For example, if a home worth $500,000 is destroyed, a 20% shortfall in the insurance coverage will be $100,000. That is not a small amount that can be easily made up. The gap between your insurance coverage and what you need to rebuild could be where your plans for your family’s future get tripped up. Paying an insurance premium year after year may, over time, appear to be a waste. It is only when you need the money that you realize cutting back on the coverage was a mistake.

Knowing How Much You Need

You pour your life’s savings (and perhaps more) into your home. You know exactly how much it cost and so,you think, getting the right insurance coverage should be easy. But that’s not correct. What the home cost some years ago is not what it will cost today. A home that cost $600,000 in 2010 may cost over $750,000 today. A policy that pays out $600,000 is not going to be enough to rebuild. On top of that, there are all the other expenses that come with paying for temporary accommodation till your home is ready to occupy.

Another problem that occurs is that many homeowners fail to update their insurance policies after making improvements or additions to their homes. A home could have $50,000 worth of work done on it over a few years. That shortfall is bad enough, but it is often worse. The $50,000 worth of improvements could add $100,000 to the value of the home. Without adequate coverage, rebuilding it to the same standard that it was, will be nigh impossible.

Check Your Insurance

The California Department of Insurance advises all homeowners to check and see if their insurance coverage is enough for them to rebuild. In addition, an inventory of the contents of the home should be regularly updated. This sounds simple enough, but insurance is a complicated subject and it is easy to make mistakes. These mistakes may not come to light until a home has been lost and the insurance payout is not enough for rebuilding. Getting the advice of an insurance agent will help you to ensure that you have the right coverage. This is not a one-time exercise but an action that should be undertaken every few years so as to ensure that when required, there will be enough money to rebuild the home and protect your family’s future. 

Preventing Thefts During Holiday Season

The holiday season is something that everyone looks forward to. Unfortunately, that “everyone” includes criminals too. We love the holidays because it’s a time for family, friends, fun and festivities. Burglars love it because,for them, it is the time for easy pickings. Thefts and break-ins skyrocket during the holidays because criminals know that this is when homes are left empty for extended periods, and people, preoccupied with holiday activities, tend to become careless about precautions they normally would take. Here’s what you can do to make life more difficult for burglars and keep yourself from becoming another crime statistic.

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Keep Your Lights On

How do burglars know if a house is empty? The simplest way is to look out for those that have no lights on at night for a few days in a row. That usually means that the family is away. If you have automatic timers installed set them to turn the lights in various rooms on and off at set times of the evening and night. If you don’t have timers, ask a neighbor to drop in every alternate day or so and turn on the lights for the night. The neighbor can also collect any mail that may be lying on the doorstep – that is another giveaway that no one is at home. Do not forget to stop newspaper delivery for the days you will be away – a pile of papers in front of the house is a burglar magnet!

Protect All Entry Points

Thieves will enter a house from wherever they can, not just the front door. Before going out of town spend a few minutes double checking that all possible entry points to the house are securely closed. That includes doors, windows, garages, French windows, and so on. If you have an alarm system installed, turn it on and check that it is working. Ask your neighbors to keep an eye on your home and report any suspicious activity, such as strangers lurking around, to the police. You can also inform the police about your absence from home and request them to do extra drive byes during that time.

Protect Your Purchases

Holidays are a time for shopping. As you go from store to store, the many bags in your car would be a tempting target for thieves. Keep all your purchase out of sight in the trunk and go home between stores as much as possible to leave your shopping in the house. Remember to ensure that your car is always locked and try to park only in well-lit places that are not deserted.

The Best Protection

Crooks are smart and they are always looking for ways to outwit all the precautions you take. There is no such thing as a sure-fire guarantee that you will not be robbed, no matter what you do. The best protection for you and your family is to ensure that your insurance coverage is enough to allow you to recover, if you should be robbed. Your homeowners insurance policy may not be enough. Talk to an insurance professional to see if there are gaps in your coverage that you need to fill. Once that is done, you can rest assured and fully enjoy your well-deserved holidays.

Thursday, November 23, 2017

Climate Change Will Cause More Disasters in California

The phrase “natural disaster” can be misleading. Disasters such are earthquakes, flood and fires are beyond human control. But that does not mean that humans have not played a role in how frequently these disasters occur and how much damage they cause. The case for and against the effects of climate change will continue to be argued for years, but as California Gov. Jerry Brown said recently "With a warming climate, dry weather and reducing moisture, these kinds of catastrophes have happened and will continue to happen.” In other words, in California, the ground realities of climate change are clear.

The Effects of Climate Change

The increase in the severity and frequency of wildfires in the state is alarming. Experts say that as long as global temperatures continue to rise, the problem will increase. While climate change is not what starts wildfires, the variations in temperature and rainfall that it causes contributes to how these fires develop and spread. In California, weather patterns over the last few years have created an ideal foundation for a devastating fire season which usually reaches full intensity in the month of October. There are 4 key factors involved:

   ·     The high temperature in summer months results in grass, bushes and trees being significantly drier by the time the fire season starts.

  ·     The dry winds from the interiors of the continent enable the fires to spread faster than they did before.

  ·     The higher temperatures also mean that the fire season will last for longer than it did in the  past.

  ·     There is more rain and snow during the winter. This may appear to be a factor that will help prevent fires, but it is not so. The higher precipitation in winter means that more vegetation will grow and grow faster. There will thus be more of it to dry out and burn when the fires start.

Improvement Will Take a Long Time

The Paris Climate Acord, which the U.S. is no longer part of, has set a limit of a 2 degree Celsius rise in global temperature by the year 2100. The amount of drying that such an increase will cause will require a huge amount of precipitation to counteract the drying out and the fire risk that will result. None of the existing scientific models predict such an increase. Till things change for the better, the risk of loss from fires will continue to rise.

The only protection for homeowners against the loss of this biggest investment in their lives and the one on which their family’s future depends is through insurance.Unfortunately, California has a large number of uninsured and under insured homes. The reasons for this are the cost of insurance and a common belief that disasters happen to the “other guy.” Saving a few dollars today may have a small impact on a family’s budget, but the loss of a home can destroy its hopes for the future. Finding the right insurance coverage at a cost that is viable, requires professional expertise. Talking to an insurance broker about home insurance needs will give homeowners the information they need to make insurance decisions that are in their family’s best interests.