Tag: #localagency

11 Tips from a Pro

Insurance can be confusing–have enough, too much or even need it at all?

I am constantly learning from Cyndi Jeffers, CIC, and thought you might also. She has answered thousands of questions over her 30+ year career, but we don’t have enough time or space to cover them all today. We’ll start with the following 11 points to clear up some common misconceptions about different types of insurance.

  • PRO TIP: When shopping for insurance coverage, make sure you compare apples to apples. You get what you pay for with insurance, and a lower premium can be an indicator that some of the coverages you had are no longer there, or that the agent didn’t input your information correctly (which could result in denial of a claim).
  • How much liability insurance coverage do I really need? Purchase enough coverage to protect your assets. If you own a business, and it’s not an LLC or corporation, include the business assets in the total and make sure your business liability is enough to protect your business and personal assets.
  • When should I add Long Term Care? Long Term Care insurance is not just for the elderly – a bad accident or a debilitating disease can affect a person of any age.
  • PRO TIP: Take responsibility for maintaining your home. Most things that happen are caused by lack of maintenance, and insurance doesn’t cover that.
  • PRO TIP: Drive defensively – don’t assume the other driver knows what they’re doing. Most auto accidents are caused by distracted drivers.
  • What’s the difference between Market Value and Tax Appraisal? Property insurance is not based on market value or tax appraisal. Market value is a reflection of what someone is willing to pay for a property; tax appraisal is typically based on market value, a set millage rate, and a tax rate. Neither market value or tax appraisal are good indicators of what it would cost to rebuild your home or business building as it stands now – that’s what insurance is for.

A millage rate is the tax rate used to calculate local property taxes. It represents the amount per every $1,000 of a property’s assessed value. Assigned millage rates are multiplied by the total taxable value of the property in order to arrive at the property taxes.

from investopedia.com

  • When should I contact my agent? Major changes should always be reported to your agent! It’s not about possibly raising your premium – it’s about continuing to pay premium for a policy that may no longer fit the situation and therefore may not provide coverage in the event of a loss.
  • Can I use my personal auto insurance for my company vehicle? If you use a personal vehicle for business, be sure your agent is aware of it – there is only limited coverage for business use on a personal auto policy. If you have an advertising sign on your vehicle or you have employees who drive your vehicle, it’s time for a commercial auto policy.
  • I just wrecked my car. Who do I call first? Before you call the 800 number to file a claim, contact your agent to discuss what happened. People often panic and call the insurance company, setting up a chargeable claim when maybe the damage is less than the deductible, the other person’s insurance is responsible, or you find it’s a maintenance issue not covered by insurance. Your agent is there to help you!
  • Can I change the type of roof on my house that was damaged by a storm? The basic purpose of insurance is to put things back the way they were before the loss occurred – it’s not meant to provide additional benefits. If you didn’t have a metal roof on your home before the hail storm, you will not have one after the claim is settled (unless you pay the additional cost yourself).
  • PRO TIP: If you know of someone who committed insurance fraud, report them – their actions are affecting everyone, including you!  

Insurance fraud is a major factor in insurance premium increases. Property & casualty insurance companies lose approximately $34 billion a year to insurance fraud, while as much as $259 billion was paid out as a result of healthcare fraud in 2010 alone. In addition, the cost of combating fraud is also passed on to the consumer. Insurance fraud takes many forms and is committed by insureds, contractors, healthcare professionals, etc.

The Big Four: Prepare for Disaster!

Natural disasters can occur anytime, anywhere with little or no warning.

Flood.

Earthquake.

Tornado.

Sinkhole.

While we can’t prevent a natural disaster, we can prepare and attempt to protect property and possessions from the forces of Mother Nature.

If you only read one line on this page, read this: Homeowners insurance does not cover flood!  

Flood insurance is available through only 60 insurance companies who participate in the National Flood Insurance Program (NFIP) in 22,000 communities across the US.  Oak Ridge is one of those communities.  Flood insurance covers overflow of inland water (lakes, rivers); pooling or runoff of surface water from any source (rain); collapse of land along a body of water due to wave or water currents; and mudflow.  Yes, mudflow – if your house is on a hill, you may still need flood insurance!

In fact, the NFIP reports that more than 20% of their claims come from outside the high-risk areas. Federal assistance may only be available to those without flood insurance if the president declares a disaster. However, that assistance is not free – it comes in the form of either a USBA loan (which must be paid back) or a FEMA disaster grant (which averages about $5,000 per household). In addition, many people do not meet the strict eligibility requirements, so they do not qualify for either option.

The average flood insurance claim is around $30,000.

Keep in mind, there is typically a 30-day waiting period for coverage to begin after a policy takes effect.  A flood policy covers the building, its foundation, electrical, plumbing, heating & air systems, hot water heaters, appliances, permanently installed carpeting, etc. Contents coverage can also be purchased.  Premiums are based on the property location, so high-risk areas will have higher premiums while low to moderate risk areas may qualify for the Preferred Risk program.

Earthquakes happen in our area more often than anywhere else in the US! Most are small, but in 1973, Maryville had a 4.7 magnitude quake and in 1913, Knoxville had a 5.9.  Earthquake coverage is not automatically included in a Homeowners policy, and some insurance companies do not offer the coverage at all. After an earthquake occurs, there is typically a waiting period before coverage can be purchased.  The deductible is typically a percentage of your dwelling or building limit.

2014 Seismic Hazard Map from usgs.gov

Tornadoes are becoming more common in Tennessee. Since 1979, tornado alley seems to be moving eastward, and one report puts Tennessee in the top 4 of deadliest states for tornadoes.  In 2002, a tornado devastated the Mossy Grove community in Morgan County.  Our area often experiences high winds that down power lines and cause significant property damage. Many insurance companies now offer a separate wind/hail deductible on property policies, with a choice of either one deductible for everything or a higher deductible for wind/hail.

Stock Photo, public domain

Sinkhole coverage is available on property policies in Tennessee – some companies automatically include it while others will add it for an additional premium. Limestone makes up a lot of ground beneath East Tennessee soil, and it is quick to erode with water.

Typically, sinkholes form so slowly that little change is noticeable, but they can form suddenly when a collapse occurs. Such a collapse can have a dramatic effect if it occurs in an urban setting.

usgs.gov
From usgs.gov

Discuss your risk potential and options with your insurance agent before another disaster strikes!  

Our agents are happy to review your policy and confirm your coverage. Give us a call at 865-483-8483.

Content used by permission from original article written by Cyndi Jeffers, CIC, Commercial Lines Specialist at Herron-Connell.