AccidentsMost of us know that each individual state requires that you carry auto liability insurance. In the state of Arizona, you are required to carry at the least 15/30/10. To break it down, what this means is that you have up to $15k (per person) and $30k maximum (per accident) for BI (bodily injury) should you cause injury to someone during an accident for which you are at fault. The $10k is the maximum coverage for PD (property damage) that was caused by you. Although your premiums for this type of coverage are very cheap and may be within your tight budget, there are several things to consider before making a quick, impulsive decision that might end up haunting you for the rest of your life.

The average cost of a vehicle these days is a little over $30k. Sure, you wouldn’t be responsible for the cost of a brand new vehicle if you caused an accident because we all know that the value of a car depreciates immediately after you drive it off of the lot. In fact, the average cost of an accident in which there is ONLY property damage was $9078 in 2011, according the AZ Motor Vehicle Department. You have $10k in coverage, no big deal, it’s just under your limit right? Keep in mind that this is an average figure only! This doesn’t guarantee that any damages caused by you won’t be over $10k. You should also consider that property damage is not just limited to someone else’s vehicle. You can damage a number of things…a lamp post, a yard, or even a house. PD coverage also pays for your legal defense costs if you are sued as a result of these damages and you don’t need to be an expert to guess how much that could run you.

Now it’s time to get serious and address bodily injury. If you have the required state liability limits in the state of Arizona, then you are covered up to $15k (per person) which maxes out at $30k (per accident). We all know that accidents happen and according to the AZ Motor Vehicle Department, the average cost per incident in 2011 in regards to BI was $22,746 and this was just for Non-incapacitating injuries. The average cost per incident for incapacitating injuries jumps to $70,854 and the average cost per incident for accidents that involved fatalities was $1,438,200. I don’t think anyone is in disagreement that 15/30 is definitely not enough BI coverage for anyone.

What can you expect if your insurance coverage comes up short? It’s simple really. If the amount of BI and/or PD exceeds the limits of your coverage, you are at risk of being sued. Depending on the amount in which you are sued for, you can potentially have your wages garnished for the rest of your life. Think for a moment of the victims as well. Not only have you disrupted your own life financially, mentally, and possibly physically, you have also disrupted someone else’s life in the same manner. Think of it in terms of your family and if the tables were turned. It’s not something we are necessarily comfortable thinking about, but what would the implications be if someone caused an accident involving you or your family members and they did not have the coverage to make you whole again? It’s a disturbing scenario.

We choose not to write state limits for any of our clients. It’s something that we feel strongly about and believe it is in the best interest of our clientele to carry liability limits of at least 100/300/100. If you currently have state liability limits, ask yourself “How much am I really saving in the long run?” There is no better time than now to get with your agent or insurance carrier to discuss increasing your auto insurance limits. Be safe, but most importantly, be protected! Call our office for a free quote today at 480-288-5900!

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These days you can buy nearly anything online, even your insurance.  Although it may seem like you are saving time and money by obtaining a policy online, it may not be so convenient later.

One of the biggest advantages of working with an agent is that they have time to sit down and talk with you, in turn allowing you to establish a one on one relationship.  Just one visit with an agent can prove to be beneficial in respect to knowing what your options are and choosing the best possible coverage that fits your needs.  In addition to this, based on your answers to a few simple questions, an agent is able to find possible discounts that you may be qualified to receive.  Purchasing insurance can sometimes be stressful and an agent can alleviate some of that stress, if not most of it just by understanding and being able to relate to you.  After all, we are human and it’s comforting to know that someone has your best interest at heart.

Ben Franklin said it best, “Time is money”. Although an online agency provides you with a phone number where they can be reached, you may not be able to speak with a live person. I’m sure that we have all experienced the downfalls of 800 numbers and the “customer service” they provide.  One could spend 30 minutes or more being looped from one automated message to the next only to reach a live person who ends up transferring you somewhere else. Being able to reach your agent by phone without having to guess which automated option to choose can save you both time and aggravation.

One final advantage to working with an agent who is local is that they can work with you in regards to your coverage.  They can adjust your limits and/or deductibles without sacrificing the important coverage that you need resulting in a policy that is tailored just for you and your pocketbook.   Online agencies give you the freedom to choose the coverage you want according to what you can afford, but an agent can recommend coverage that will protect you and your family all while keeping you within your budget.

For example, the required liability coverage amounts in the state of Arizona are 15/30/10.  Sure, you may get a huge savings up front, but will you pay for it in the end?  If you cause an accident which results in bodily injury more than $15,000 or property damage more than $10,000, you are financially responsible.  Just to give you an idea, according to the National Safety Council, the average cost of injury in a car accident is $61,600 and the average price of a new vehicle is a tad over $30,000 according to Forbes.  Saving a couple of dollars by reducing coverage could cost you thousands in the long run.

With all of the decisions that you make in life, don’t let choosing the right policy overwhelm you when you have an agent right who is right around the corner.  Make an appointment today by calling us @ 480-288-5900.  We can help you protect what matters most!

Homeowners Insurance

Is your homeowners policy enough to cover you in the event of a loss? (Image via PrimeImageMedia.com on Flickr)

There is no question that the volatility in the housing market in recent years has affected the price and value of almost every house in America.   Most homeowner’s have seen the value of their home drop, rebound a little, and then drop some more.   People everywhere are focused on keeping their homes or refinancing their homes to get more affordable rates.  All this change means it is time to take a look at your homeowner’s insurance in order to make sure you still have adequate coverage.  Many homeowners think their homeowner’s policy covers what they are expecting it to cover without really understanding how the kinds of economic changes we are currently experiencing can impact their coverage.  Take a few minutes to walk through your policy and make sure it still offers the coverage you need.

Here are some of the key components you need to look for to ensure you are covered no matter what comes your way.

1.     Replacement Value

Although the policy limits for your homeowner’s insurance policy are based on the estimated value of your home, the coverage you need is how much it will cost to rebuild or replace your home.  This means that a significant drop in your home’s value doesn’t necessarily equate to a decrease in the coverage you need.  It could be a big mistake to decrease your policy limit based on a lower assessment or appraisal.

Economic turmoil and inflation have taken their toll on everything we buy and building supplies are no exception.    This means that even though the value of your house has decreased, the costs to rebuild it have not.  In fact, it is very likely that the cost to rebuild your home is actually higher than it was as little as two years ago.  Check with your insurance agent to make sure your policy limit reflects a current estimate of replacement cost.

It is also a good idea to review the policy limit for replacing your personal property which is based on a percentage of the overall replacement value.  If your personal property would cost more to replace than the current limit, talk to your agent about increasing the limit or scheduling high dollar items to ensure they are covered.

2.     Improvements and Additions

If you have made significant home improvements or added an addition, the value of your home has changed and your insurance may need to change to reflect the increase.  Things like adding a bathroom, changing to a more eco-friendly heating system, or replacing the roof may increase the value of your home but more importantly, they may increase the replacement cost of your home.  Make sure you notify your insurance agent of these kinds of changes and verify that the policy limit will be enough to cover the improvements.

In order to make sure you have the protection you need, you need to review and update your homeowner’s policy regularly.  Remember that the policy limits need to cover the cost of rebuilding your home and replacing your possessions and therefore need to be based on current cost not retail value.  You don’t need to change your limits based on changes in the value of your house, but if building supplies and construction costs continue to rise, that may mean you need to make a change to your policy limits.

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Medicare Coverage

Which Medicare coverage is right for you? Image via Old Shoe Woman on Flickr

There is no way to sugar coat it; Medicare can be mindboggling.  For people moving to Medicare from private insurance, switching over can be a frustrating time because you have a lot of questions and aren’t sure where to get the answers.  If you are used to the relatively straightforward private insurance company plans offered through employers, navigating the many parts of Medicare is often the first obstacle you have to overcome.  With so many parts and a late enrollment penalty hanging over your head, it’s hard to know what you need, which parts to choose, and who you need to work with to get all the parts and pieces in place before you run out of time.

To ease the adjustment, here is a basic breakdown of the different parts of Medicare, what each part covers, and how they work in conjunction with each other to provide the health insurance coverage you need.  For more information, you can visit the Medicare website or talk to your insurance agent.

1.     First Things First

Let’s review what Medicare is and who is eligible for it.  The Medicare program provides health insurance for people in specific situations and is funded by the Federal Government.  In order to qualify for Medicare, you must be either 65 years old or older, under 65 with a specific disability, or any age with end-stage renal disease.

2.     Medicare Part A: When You Need to Go to the Hospital

Medicare Part A is part of your base Medicare coverage.  It pays for your medical expenses when you are admitted to a hospital and receive inpatient care.  Additionally, it may provide some coverage or assistance in paying for a skilled nursing facility, hospice care, and some of your home health care needs.  If you qualify for Medicare, Part A is automatically part of your coverage unless you opt for Part C below.

3.     Medicare Part B: When You Need Medical Care Outside the Hospital

Medicare Part B is also part of your base Medicare coverage and it pays for your medical expenses outside of the circumstances covered by Part A.  If you need to see a doctor, have an outpatient procedure at the hospital, or other eligible expenses, Part B pays for 80% of the cost after you meet your Part B deductible.  Preventative care and care associated with managing long term illnesses are also covered by Part B but are generally covered at 100%.  Unlike Medicare Part A, there is a monthly premium that must be paid for Part B coverage.

4.     Medicare Part C: aka Medicare Advantage Plans

Medicare Part C encompasses both Part A and Part B and offers Medicare recipients another option for health insurance.  A Medicare Advantage Plan is run by a private insurance company and functions like the HMO or PPO you likely had through your employer prior to switching to Medicare.   If you choose Medicare Part C, any hospital stays, medical treatments, preventative care, hospice, skilled nursing, or home health care would be covered under the Medicare Advantage Plan you select.  In addition to those Part A and B services, a Medicare Advantage Plan may also cover other costs including prescription drugs.  Medicare Advantage plans have a monthly premium that you must pay.  If you choose Medicare Part C, you do not need Part A or Part B and depending on the plan you choose, you may not need Part D either.

5.     Medicare Part D: Prescription Drug Coverage

Medicare Part D is an optional coverage offered by private insurance companies that have been approved by Medicare to offer coverage for prescription medication.  If you have Medicare Parts A and B, you will more than likely want to purchase a Medicare Part D plan to help cover the cost of any medication.  If you have a Medicare Advantage Plan that doesn’t offer the prescription drug coverage you need, you may want to find out if a Medicare Part D plan could help save money on your prescription drugs.  Part D requires you to pay a monthly premium and has an annual limit.

6.     Medicare Supplemental Insurance: Medigap

This is an extra policy you can purchase to help cover your out of pocket expenses and things that are not covered by Medicare.  If you purchase a Medicare Advantage program, you are not eligible for Medigap coverage as it only applies to those with traditional (Parts A, B, and maybe D) Medicare coverage.  Although there are 12 different types of Medigap coverage offered, each type provides the same coverage regardless of which insurance company you purchase it from.  You will need to pay an additional premium each month if you decide to purchase Medigap coverage.

The complexities of Medicare may seem overwhelming, but once you understand what each part covers and how the different combinations work together to cover your health care costs, you can make the right decision for you.
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Homeowners Policy Mistakes

Is your homeowners insurance enough to replace your home and possessions? image via Flickr

Homeowner’s insurance can be the best money you have ever spent if fire destroys your home or a home invader takes some stuff and trashes the rest.  But many homeowners’ make critical mistakes when purchasing their policies that only become apparent after a loss, when it is too late to do anything about them.  Mistakes like these can cost a lot of money and may leave you with an unpaid mortgage, an unusable house, and nowhere to call home.  Make the most of the protection homeowner’s policies offer by avoiding these 5 common mistakes.

1.     Not Reading the Policy Documents

This can be a costly mistake as the policy document outlines exactly what is covered and not covered by the insurance company.  The discussion you have with your agent may leave out important considerations and it is likely that you believe you are covered for things that are not actually covered by your policy.  Before buying a policy, ask the agent for a sample of the policy documents that mirror the policy you are considering.  This will give you the chance to read through the policy and ask any questions you need answered before you are committed.

2.     Not Scheduling High-Value Property

Another very costly mistake that many homeowners make is not scheduling property that falls outside the individual property limits of their policy.  If you are surprised that your policy has limits on specific kinds of property, you haven’t read your policy.  Almost every homeowner policy includes limits on the loss of specific types of property like computers, jewelry, stamps, coins, and firearms.  If the value of your property in that category exceeds the policy limit, you need to ensure that your policy has a rider that will cover the excess value if there is a loss.

3.     Not Understanding the Difference Between Actual Value and Replacement Cost

This mistake can leave you with a mortgage on a house you can’t live in and can’t afford to rebuild.  According to the National Association of Insurance Commissioners Consumers Guide to Home Insurance, actual value will only pay for your loss, which is the value of your house and property at the time of loss and includes considerations for age, wear and tear.  This means that if the value of your house is less than what it would cost to rebuild it, you will have to come up with the difference on your own.  It also means that if the actual value at the time of the loss is determined to be less than your mortgage, you will still owe the mortgage company that difference.  Replacement cost, on the other hand, pays to replace the house and property, regardless of the actual value at the time of loss.

4.     Not Having Coverage for Specific Perils

Many people think that their homeowner’s policy covers damage to their house no matter what causes that damage.  Unfortunately, this is not true on most homeowner’s policies, as any homeowner who has survived a hurricane only to find out that water damage is not covered, can attest.   While it is common knowledge that floods are not covered by homeowner’s insurance, many people don’t understand that flood and water damage are generally considered the same thing.  Unless you live in California, it is unlikely that you know that most policies exclude damage from specific perils like earthquakes, nuclear accidents, and war.  The best way to protect yourself and your property is to understand what your policy covers and purchase additional coverage for perils that could happen but are excluded.

5.     Underestimating Everything

Another costly mistake is underestimating things like how long it would take to rebuild your house, the value of your personal property, or the value of your home.  In the event of a loss, all these can seriously impact your financial well-being.  If your policy only provides for a year of additional living expenses and it takes 18 months to rebuild your house, you will have to pay for the additional 6 months out of pocket.  If you underestimate the value of your personal property, you may be unable to replace what is lost.  If you underestimate the value of your home, you may be saddled with mortgage debt for a house you can’t live in and can’t afford to repair while paying to live somewhere else.

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Are you adequately insured?

Every time you get behind the wheel, you run the risk of colliding with one of the millions of drivers that don’t have car insurance.  According to the Insurance Research Council one in seven U.S. drivers is on the road without insurance despite the fact that almost every state requires drivers to carry a minimum level of coverage.  The best way to protect yourself from these uninsured drivers is to make sure you have the right amount of insurance.

But how much insurance do you really need?

 

In order to answer that question, you need to understand what the different types of coverage are and how they protect you.

Liability coverage is usually the first listed on your policy and covers losses incurred by other people because of your negligence.  Your liability limits are listed as three numbers separated by slashes like 100/300/100. The first two numbers are your bodily injury liability coverage limits.  Bodily Injury Liability pays for the medical expenses of others who are injured in an accident that is determined to be your fault.  The first number is the limit for a single person’s medical expenses, a 100 indicates that the maximum the insurance company will pay for one person’s medical expenses is $100,000.  The second number is the total amount the insurance company will pay for all medical expenses for the occupants of the other car, so a 500 would mean $500,000.    This type of coverage will pay for the losses of the person or people you hit but will not cover anyone in your car.  The third number is the total amount the insurance company will pay for property damage for one accident meaning a 50 would provide $50,000 of property damage pay outs.  Most states require all drivers to carry a minimum amount of liability coverage.

The remaining types of coverage included in your policy protect you from losses.

The first is Personal Injury Protection coverage which is also called Medical Payments.  This covers medical expenses for you and anyone in your car resulting from an accident.

Next is Uninsured/Underinsured Motorist coverage which pays for your pain, suffering, and other damages if you are injured as the result of an uninsured driver’s negligence.

The other two common types of coverage are Collision and Comprehensive.  Both cover the cost of repairs to your vehicle.  Collision pays for damage resulting from an accident and comprehensive covers damage caused outside of an accident.  Most leaseholders and auto finance companies require that cars financed through are protected with collision and comprehensive coverage.

The first step in determining how much insurance you need is to decide which of the standard coverages you need.  The next step is to determine how much of each coverage you need.  The best starting point is to review your state’s minimum requirement, unless you live in New Hampshire, which is the only state that doesn’t have a minimum requirement.

Here in Arizona, drivers are required to have Liability coverage with limits of 15/30/10 and are not required to carry uninsured motorist coverage according to the Arizona Department of Transportation. For most drivers, this amount of coverage is not enough to provide the protection they need.  First, the limits are very low compared to the cost of medical care and the value of automobiles.  This means that if you are at fault in an accident and the medical bills of the people in the other car exceed $30,000, you will be responsible for paying for everything over and above that amount.  Second, the state minimum only provides protection for other drivers, which means you will be responsible for your own medical expenses and all car repairs.  Additionally, with a liability only policy, you will have no recourse to recover damages if someone without insurance injures you in an accident.  Third, purchasing only the state minimum won’t pay for damages or loss if someone steals your car or a tree falls on your car.

Once you know the minimum coverage required by the state, the final piece of the puzzle is to decide what you need over and above that minimum.  This will be determined by what assets you have to protect.  Add up the value of your assets including your house, car, investments, retirement accounts, bank accounts, and property and then choose policy limits that exceed that value.