Docstoc

insurance

Document Sample
insurance Powered By Docstoc
					RETIREMENT PLANNING SERVICES, INC.
Oakton, VA YOUR UMBRELLA, HOMEOWNERS AND AUTOMOBILE INSURANCE CHECKLIST Financial Ratings of Your Insurance Companies: Retirement Planning Services, Inc. concurs with Joseph M. Belth, publisher of Insurance Forum, that insurance should be obtained from companies that earned “very high ratings” from at least two of the four major rating firms. “Very high ratings” are defined as follows: Best Standard & Poor’s Moody’s Duff and Phelps A++ AAA, AA+ or AA Aaa, Aa1, Aa2 or Aa3 AAA or AA+

His second criterion is that the insurance company does not have a rating below the fourth category from any of the four major rating firms. The telephone numbers for three of the four major rating firms are listed below: Standard & Poor’s Moody’s Duff and Phelps 212-208-1527 212-553-0377 312-368-3157

1. Financial ratings. Confirm that your insurance company meets the Insurance Forum's and Retirement Planning Services, Inc. standards. Your Umbrella Coverage: Most individuals are covered for personal liability under their homeowners and automobile policies. There are limits, however, to the amount of protection that these primary policies provide. If you rely solely on your automobile and homeowners coverage for your personal liability protection, you can well be placing yourself and your family at significant risk. Your umbrella coverage increases the amount of personal liability coverage found in your auto and homeowners policies, giving you the higher protection that is so important in today’s society. 1. Umbrella liability limit. Confirm with your agent that you have adequate coverage. We recommend a minimum of $1,000,000 in liability coverage. 2. Underlying liability coverage requirements. Most umbrella liability policies require certain minimum underlying coverage from your homeowners and automobile insurance policies. Confirm with your agent that you have the required amount of underlying liability coverage required by your umbrella policy for your home, cars, and other insurable property. 1

3. Extension of coverage. Your umbrella policy must specifically state the insured interests covered. Confirm with your agent that your umbrella policy extends coverage to all of your real estate and cars.

Your Homeowners Coverage: 1. Type of policy. There are several levels of homeowners coverage available. These coverage levels are called “HO-2” and “HO-3” in the insurance industry jargon. HO-3, or broad form coverage, is what we recommend. Confirm with your agent that your policy provides a broad form of coverage. 2. Credits available under your policy. Most all policies provide for various premium credits, based upon applicability. These credits include fire alarm, new house, security (burglar alarm), proximity to fire hydrant and fire station, to name a few. Discuss these credits with your agent and confirm that your are receiving all the applicable credits available. 3. Deductible. Your deductible on your insurance policy represents the amount of financial risk that you are holding in the event of a covered loss. We often find that when small claims are made, the insurance company either increases your premiums for a period of years, or yet worse, drops coverage. In order to decrease the number of small claims and prevent your insurance company from canceling your coverage, establish your deductible at $1,000. 4. Replacement cost coverage on dwelling. Replacement cost coverage means that, in the event of a partial loss, your insurance will pay to repair the damage to its original condition prior to the loss. If your home is completely destroyed, your insurance will pay to replace your home using like kind and quality of materials and construction. Confirm with your agent that you have guaranteed replacement cost coverage on your home. 5. Replacement cost coverage on contents. Replacement cost coverage means that the insurance company will pay the cost of repair or replacement, whichever is less. Confirm with your agent that you have replacement cost coverage on contents. 6. Special limits on personal property. Be aware that your policy contains certain special limits on what it will pay for losses that apply to specific types of property. These types of property generally include silverware, coin and other collections, jewelry, firearms, furs, electronic equipment and cash and other securities stored in your home. Review your property coverage with your agent to make sure you have adequate coverage for these types of property.

2

7. Replacement cost coverage on your antiques. Even though you may have replacement cost coverage on your antiques, the historical or antique value will not be covered. You are only covered to the extent of a reproduction or purely functional replacement value. Secure separate coverage if you have antiques with economic and historical value. 8. Loss of use coverage. This will provide coverage if you lose the use of your home due to a covered cause of loss, your insurance will pay your extra living expenses for a reasonable time until the home can be returned to a livable condition. Confirm with your agent that you have loss of use coverage. 9. Medical payments coverage. Medical payments coverage pays the necessary medical expenses of people other than you and your family for injuries that happen on your property. We recommend that you establish your medical payments coverage at $5,000. 10. Ordinance-and-law coverage. Ordinance-and-law coverage pays the cost of necessary building-code upgrades when you are re-building your home after you have experienced a loss. This is particularly important for older homes. If you have a home 20 years or older, confirm with your agent that you have this coverage. 11. Sewer and drainage coverage. Sewer and drainage coverage pays the cost for repairs if you experience a backup in your sewer or drains. Confirm with your agent that you have this coverage. 12. Other coverages. In addition to the coverages described above, you may need to discuss the following coverages with your agent depending on your particular situation: (a) business use coverage; (b) business property coverage; (c) sinkhole coverage; (d) flood coverage; or (e) earthquake coverage.

Your Automobile Insurance: 1. Credits available under your policy. Most all policies provide for various premium credits, based upon applicability. These credits include multiple cars, antilock brakes, passenger restraints, and good driver, to name a few. Confirm with your agent that you are receiving all applicable credits available. 2. Collision and comprehensive coverage. Collision is an upset, overturn, or collision of your automobile with another object. Comprehensive is actual physical loss or damage that is not collision. In order to decrease the number of small claims and prevent your insurance company from canceling your coverage, establish your deductibles at $1,000 each. 3. Medical payments coverage. Your policy pays the necessary medical expenses of people other than you and your family for auto accident injuries. Establish your medical payments coverage at $5,000. 3

4. Underinsured/uninsured motorist coverage. Your underinsured/uninsured motorist coverage is the component of your auto insurance policy that applies when you are in an accident and the other party is liable and has insufficient or no insurance. This coverage also pays the medical expenses not paid by your major medical insurance for bodily injuries incurred. Examples of such expenses include elective cosmetic surgery and other procedures not covered by your major medical insurance. We recommend a minimum coverage of $100,000/$300,000. Establish your underinsured/uninsured motorist coverage at the amount of bodily injury liability coverage you have. 5. Primary driver classification. Please review the primary driver classification of each car with your agent. 6. Other coverages. In addition to the coverages described above, you may need to discuss the following coverages with your agent depending on your particular situation: (a) business use coverage; (b) coverage if you have an accident while driving a rental car; (c) coverage for loss of income to a rental car company; and (d) rental reimbursement 7. Use of employer provided automobile. If you have an employer-provided auto, do not use it for personal use unless you have confirmed coverage by your employer. You may have no personal use coverage on the company car. If you use your personal car for business use, confirm that you have coverage at work, or add coverage on your personal policy. OTHER RECOMMENDATIONS: 1. Have your jewelry, furs, antiques and collections reappraised every three to five years. 2. Keep a current listing of your personal property, so that any claim you make will proceed smoothly. You will also be much more likely to receive adequate compensation for your loss. Consult your agent for advice on the extent to which you must document your property. Keep it in a separate and safe location. Once you have your inventory, adjust your personal property coverage to that level. Most clients find it to be three or four times what they originally thought they had. 3. It is important that you review and update your insurance coverage annually. You should also increase your coverage whenever you do any work on your residence or make any major purchase of personal property. 4. If you use a credit card that offers rental car insurance, be aware of any limitations that the credit card company may impose on such coverage.

Our checklist is a result of general financial planning concepts. The provider of your insurance needs to verify your coverage and should have the definitive word in this area. 4