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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HomeOne of the most common questions that we are asked in our office is “Why is my dwelling coverage so high?”  We all know that the housing market is not where it used to be. This has been the case for some time and probably isn’t changing any time soon. So why does the insurance company insure your home for more than it’s worth?

Amongst other things, home insurance is there to protect you in event that there is a complete and total loss. Regardless of whether you would purchase a new home or rebuild your home, it doesn’t change the fact that the company who is insuring your home is just that….insuring your home. They aren’t necessarily insuring you to go out and purchase another home, but rather are insuring the home that you currently live in and the coverage is determined by how much it would cost to actually rebuild your home from the ground up.

Here are a few things to keep in mind when considering the differences between Replacement Cost and Market Value:

1. The Market Value for a home generally includes the value of the land on which the home sits. The Replacement Cost of a home does not include any land values, but is only concerned with the home itself.

2. The Market Value for a home is affected by changes in the real estate market. When homes in a particular area are in high demand the Market Value of a home in that area will generally go up. In the same way, when demand for homes in a particular area is low, the Market Value of homes in that area may remain level or even go down. Replacement Cost is not affected by the real estate market but is instead affected by the fluctuations in material and labor costs to build a home. For example, if the cost of material such as lumber, concrete, drywall, and carpet are higher in a particular area, then the Replacement Cost of a home in that area will be higher than the Replacement Cost of the same home in an area where materials are less expensive.

3. The Market Value of a new home generally factors in the cost that was required to build the home new. Replacement Cost, however, is looking at the cost to re-build the home, if it were completely destroyed, using all of the same materials and construction techniques originally used to build the home. The cost to build a new home can be quite different from the cost to re-build a pre-existing home due to access issues, labor efficiencies, economies of scale, debris removal and higher price of materials that may no longer be in common use (such as lath and plaster vs. drywall).

When insuring a home, we always use the Replacement Cost of the home to determine the amount of insurance required as this is what it will cost to replace or repair the home should it be damaged or destroyed. Understanding your coverage and what it means for you is just one of the many things that we offer here at Canyon Lands Insurance. If you are interested in a free quote, please visit our website at http://www.canyonlandsagency.com or give us a call at 480-288-5900. Hope to hear from you soon!

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!

Do you know losing a job will affect your insurance? (image via fairfaxcounty on flickr)

Times are tough and the economic turmoil of recent years continues to claim jobs almost every day.  The loss of a job presents problems on several fronts, first and foremost, the loss of income.  For many people who become unemployed, this problem overwhelms any others and makes it difficult to see how losing a job impacts other areas of your life.  Unfortunately, not dealing with these other areas can lead to more problems down the road.  One of these areas is your insurance coverage.

The last thing you need when you lose your job is to add to your family’s financial burden by purchasing insurance policies.  However, if you are like most people, you have been getting at least some of your insurance coverage through your employer.  Some of this coverage, like health and disability coverage was provided by your employer.  Other types of coverage like life, auto, and even homeowner’s coverage were purchased through your employer.  When your job goes away, in almost all cases, so does this coverage.   You may find yourself without life insurance, auto coverage, or a homeowner’s policy which further endangers the financial future of your family.

Here are things you must consider in terms of your insurance policies when you lose your job.

Health Insurance

Most people will have the option of continuing employer offered health insurance through the COBRA program once their employment ends.  This can be a lifesaver for families where the primary insurance provider suffers a job loss.  However, be prepared to pay significantly more for the same coverage.  Shop around to see if you can find an individual policy that is more cost effective.

Life Insurance

If your life insurance was provided by or through your employer, you will need to find a new individual policy to meet your life insurance needs.  This should be a top priority in order to protect your family’s future.  Temporary loss of your income is challenging enough; don’t take the chance that the worst happens and your family must figure out how to move forward without you while also dealing with the permanent loss of your income.

Disability Insurance

Life insurance is important, but disability coverage is just as important, especially for those in their middle years with families.  People in this age group are actually more likely to become disabled than to die, according to the Social Security Administration. This means that protecting your family’s finances may mean you need to secure a disability insurance policy that is separate and distinct from your employment.

Auto and Home

Many employers offer group insurance coverage for auto and homeowner’s policies that enables their employees to purchase this coverage at a discount.  When your employment ends, these policies may remain in effect but the cost to keep them may increase because you are no longer part of the group.  There is also a chance that this coverage will no longer be available.  Make an appointment with your insurance agent to discuss these policies and make sure you have the coverage you need at the best possible price.

Losing a job is difficult enough; make sure you don’t compound the problem by failing to attend to your family’s insurance needs.

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http://www.iii.org/articles/life-stages/employment-change.html

If your home were destroyed, is your insurance policy enough to rebuild and replace your possessions? (image via Delaware state fire school)

When was the last time you looked at your homeowner’s policy If you are like most homeowners, you looked at it when you bought it and then you filed it away in your filing cabinet or fireproof box for safe keeping.  But like the other insurance policies you have to protect you, you need to review and reassess your homeowners policy on a regular basis.  June is Home Safety Month which provides a great opportunity to review everything related to the safety and security of your home, including your homeowner’s policy.

Start by reading through your policy to make sure you understand all the terms and conditions and any exclusions.  Don’t hesitate to ask your insurance agent to explain anything that is unclear or answer any questions that come up during your review.  One of the most important things you need to understand about your policy is the type of replacement coverage that it provides.  This makes a big difference in determining the amount of coverage you need and explains how the insurance company will assign a value to your home and its contents if you experience any losses.

There are two primary types of replacement coverage, actual cash value and replacement value.  If your policy provides actual cash value for your losses, the insurance company will value your possessions and your home at the actual cash value minus any depreciation.  If your policy provides replacement value coverage, the insurance company will value your possessions and home at the current cost to replace them.  Understanding the difference between these two types of coverage is critical to understanding how much protection your homeowner’s policy is actually providing.

Let’s look at how the amount the insurance company would pay differs for the same loss under each of these coverage types.  There is a fire in your home that causes damage to the kitchen and the living room.  Both rooms have extensive damage and will require significant work to repair.  The fire destroys your stove, refrigerator, television, couch, and an antique desk.  Here is how the payout would differ.

If you have actual cash value coverage, the insurance company would use the value of the home to calculate the value of the portion of the house that was damaged.  Once that value was established, any depreciation would be subtracted from that value and that is the amount the insurance company would pay out for the damage to your home.  If your policy provides replacement coverage, the insurance company would get an estimate from a contractor on the cost to repair the damage and the payout would cover the cost of the repairs regardless of the value of the home or any depreciation.

The same process would be applied to the possessions damaged in the fire.  If your policy provides actual cash value, the current value of your stove, refrigerator, television, couch and antique desk would be determined and if appropriate, any depreciation would be subtracted in order to determine the payout.  If your policy provides replacement value, the cost to purchase comparable items to replace those that were destroyed would determine the amount of the payout.

As you can see from these examples, if your policy provides actual cash value coverage, you may not receive enough money from the insurance company to repair your home or replace your possessions.  Since most people don’t have the cash on hand to make up the difference in costs, most homeowners should consider having a policy that provides replacement value coverage.

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What impact does your credit score have on what you pay for insurance? (image via Flickr)

In a nutshell, yes.  Insurance companies use a variety of factors to develop a risk profile for you when they are underwriting your insurance policy and determining your rate.  One of these factors may be your personal credit history and not because they are weighing the likelihood that you will pay for your policy.

Insurance rates are based in part on how much risk the insurance company believes they will be taking on by underwriting your policy.  In order to determine that risk level, they rely on real world statistics and actuarial tables built from those statistics.  By looking at large amounts of data, the insurance industry can make certain assumptions about you based on specific characteristics like your gender, age, marital status, etc.  This is how insurance companies determine that teenage boys are more likely to be in accidents than teenage girls and that married people are less likely to file an insurance claim than single people.

When it comes to your credit, the statistics can tell the insurance company some important things about how much of a risk you are.  The industry has demonstrated that there is a very strong relationship between credit history and risk level meaning that just looking at a person’s credit history can be used as an objective measurement of their insurance risk.  The bottom line is that people who pay their bills on time and are good stewards of their finances are more careful and conscientious with their cars and homes, which makes them a lower risk from an insurance perspective.

This means that the insurance company is using your credit history in a very different way than your bank might.  When your bank looks at your credit, they are assessing your income, assets, debts, and financial history to determine how likely it is that you actually meet the financial obligation of a loan or line of credit.  They are looking at your individual details to make a decision about your ability to pay.  The insurance company is looking at your credit as an objective way to assess how risky you are from an insurance standpoint.  They are looking at your individual details as compared to other people.  The bank cares about where you work, how long you have been there, how much you make, and how much you owe.  The insurance company only cares about how your credit history informs your risk profile based on the actuarial data.

Using information like your credit history to determine your insurance rates is one way that insurance companies guarantee that they are offering their products at fair prices.  The use of statistics and actuarial information in determining risk helps remove any subjective decision making from the process.  Insurance companies can offer better prices to a broader range of consumers by using factors like their credit history.

The score used by the insurance company however, is different than your standard credit score used by banks and other financial institutions.  In order to determine your insurance score, the credit bureaus use a formula that looks at things like the number of accounts you have, how good you have been at paying your bills, how stable your finances are, any negative factors like liens and bankruptcies, and how much you currently owe.  Unlike your regular credit score, occasional late payments have less of an impact on your insurance score than patterns of financial irresponsibility.

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Do you have an adequate amount of life insurance? (image via Tetra Pak on Flickr)

1.    Your life insurance needs are as unique as you are.

There is no such thing as a one size fits all life insurance policy which is one reason it can take longer to get a life insurance policy in place.  The key to achieving your life insurance goals is to know what you are trying to achieve and then buy a policy or policies that allow you to achieve them.

2.     The life insurance you get through your employer may not be sufficient.

Many people have a basic life insurance policy through their employer and assume that this is all they need to do from a life insurance perspective.  Unfortunately, if that policy doesn’t match your needs, you may not have the coverage you need.

3.     Relying solely on employer offered life insurance may leave you with no coverage.

Even if your employer offered coverage meets your needs, if you leave your job or lose your job, you may find yourself without any coverage.  The older you get, the more your life insurance premiums will be if you purchase a new policy and if you get a serious illness, you may not be able to get coverage at all.

4.     The insurance you need will change over the course of your life.

The life insurance you need when you have small children and a mortgage is very different than what you will need when you are an empty nester on the verge of retirement.

5.     Match your policy to your needs.

The amount of insurance you need changes as you move through your life.  This is why it is important to match the amount of coverage you have to your needs.  A mixture of whole and term policies can enable you to vary the amount of coverage you need over your lifetime.

6.     Tell the truth on your application. 

You will be required to undergo some kind of medical evaluation in order to obtain most life insurance policies.  If you are not up front on your application, it may cost you your coverage right away or compromise your beneficiary’s ability to collect.

7.     Your premium will depend on your health at the time of purchase. 

The amount of your premium will depend on several factors, one of which is your health at the time of your application.  Medical conditions like high blood pressure or high cholesterol can increase your premium, even if they are controlled with medication.

8.     It saves to purchase your policies when you are young and in good health.

The amount you pay for a life insurance policy is generally set for the life of the policy when you purchase the policy, no matter how many years you have the policy.  This is one reason that it makes sense to purchase coverage when you are younger rather than waiting until you feel like you can afford it.

9.     Understand the policy terms.

In order to compare policies from different companies or even within the same company, you need to read through and understand the terms of the policy.  You also need to understand if there are any conditions so that you don’t inadvertently do anything that compromises your coverage.

10.  Shop around for the right policy at the right price.

Different companies have different offerings and use different pricing models.  You may be paying for this policy for 30 years or more and it makes sense to make sure you are getting the best price for the coverage you need.

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