Street Sense: Umbrella Time

Street Sense: Umbrella Time

For this month’s Street Sense, we spoke with Fred Giron from PHD Insurance Brokers, Inc. about FAQs in relation to property and casualty insurance. Here’s what Fred had to say…

  1. What is the most important thing that is most often missed in coverage for auto and homeowners insurance? 

A: Auto insurance: the most commonly missed coverage is uninsured and underinsured motorist coverage. There are a lot of drivers out there with little or no insurance; as high as 15%* of drivers have no coverage, so this protects the insured from losses that arise from accidents caused by the uninsured or underinsured driver. If someone hits you that doesn’t have insurance, or has too little insurance, this covers you.

  1. What is considered underinsured? Underinsured means they have less coverage than your underinsured coverage amount. So, if they have the legal requirement, which is only $15,000, and you have coverage for $100,000, your own insurance company will cover the difference of $85,000 of lost wages and personal and bodily injury. Your own comprehensive and collision coverage will cover property damage to your own car.
  2. While health insurance covers medical bills, uninsured/underinsured motorist coverage covers pain and suffering, lost wages from missed work and medical expenses not covered under health insurance.
  3. Fred recommends having the same amount of underinsured/uninsured motorist to match the bodily injury liability coverage you have on your policy to protect yourself and your family the same way you protect other drivers (typically expressed in split limits such as 100/300 or 250/500).

Homeowners: The most commonly missed item on homeowners insurance policies is jewelry. Most people assume their expensive items are covered under their homeowners insurance, however, most homeowners policies have an underlying jewelry limit of only $1,500. So, if your jewelry is lost or stolen and the value is more than $1,500, your valuables are underinsured and you forfeit the difference (and the deductible still applies).

  1. Fred recommends scheduling the items of jewelry separately on your policy for higher coverage amounts. The insurance agent may request an appraisal for the items, or they want to know what you paid for the item, to determine the amount of coverage for each item. Once you have all your expensive items scheduled, you’ll see a list of each item, a brief description of it and the associated coverage amount on your homeowners policy.
  2. Pro Tip: In the event of a loss, the insurance company may require an inventory of all personal property items in your home. Consider walking around your home videotaping your property contents to later prove that you owned all contents. It is especially important to video record artwork and other expensive or one-of-a-kind items. Fred suggests uploading the video to the cloud to store it in case of a future loss.
  3. Pro Tip 2: To keep costs down, Fred suggests increasing the deductible to an amount high enough, but that still won’t create a financial hardship. A higher deductible will reduce the premium and you can use the savings to get an umbrella policy, increase dwelling coverage, or get uninsured motorist coverage.

Q: What is something small someone could do to make a big impact to make sure their coverage is adequate?

A: Something small to make a big impact is having a personal liability, or umbrella, insurance policy. An umbrella policy provides extra liability coverage if your homeowners or auto liability coverage amounts are insufficient to cover a claim. The benefit of an umbrella policy is protection from a large claim in exchange for a small insurance premium.

  1. Fred suggests having a policy with a coverage amount that is equal to your net worth, but at least $1 million (even if your net worth is less than $1 million).
  2. Another small thing you could do that could make a big impact is have someone review your coverage(s) once every couple of years.  Having someone review your insurance portfolio is usually at no cost and can assist with spotting potential gaps in coverage.

For questions or more information, or to have Fred Giron (License #0462338) review your policies, contact him at FGiron@phdinsurancebrokers.com

*http://www.insurancebusinessmag.com/us/news/breaking-news/10-states-with-the-most-uninsured-motorists-19236.aspx

*http://www.iii.org/fact-statistic/uninsured-motorists