Property and Casualty Insurance: How to be Properly Protected
Stuff happens. Call it inattention, something overlooked, or just plain bad luck, but bad things can happen to nice people. The concept of property and casualty insurance (homeowners/renters, motor vehicle, and umbrella insurance) is pretty simple. In recognition that bad things occasionally happen, everyone throws a little money into a pot held and managed by an insurance company, pooling everyone’s contribution into a fund. Then, if bad things happen, people have a source from which to draw funds needed to rebuild their lives. While the overarching concept may be simple, the devil is in the details, and many find insurance exasperating and confusing. Thus we asked two insurance professionals, Katherine Case of Allen Freeman and McDonnell, and Ashley Rosborough of J.T. Rosborough, to join us in shedding some light on the subject as they answer some of the most common questions we hear:
Deighan Wealth Advisors: What are the top considerations a young family should think about as they add motor vehicle and property/casualty insurance?
Katherine Case: Premium price is one factor, but shouldn’t be the #1 consideration. It is beneficial to invest the time to get comparison quotes and coverage descriptions with different companies. This can be done when meeting with an independent insurance professional who would to discuss the family’s needs and concerns. It is also important to know and monitor the insurance company’s rating. AM Best rates companies based on their financial strength, operational performance and the ability to meet their obligations.
Ashley Rosborough: Busy young families need to protect the things that are most important to them, without anything falling through the cracks. If they work with an insurance professional who takes a minute to learn about who they are and what they have to protect, that professional can ensure a family is getting proper coverage. Too often, the focus quickly shifts to the lowest premium cost or ads that claim the best deal in the event of a loss. However, if you aren’t properly covered, it won’t matter how much premium you saved. Work with someone you can learn to trust who can thoroughly review and explain with you what your coverage is and how it would respond in the event of a claim. Having the peace of mind that you, your assets and your family have the proper coverage in place in the event of a loss is priceless.
Deighan Wealth Advisors: How much is enough coverage? When should a busy family avoid cutting corners, and when/how can they responsibly save money?
Ashley Rosborough: Unfortunately the world is full of unknowns, especially when it comes to the potential financial impact of a claim. That said, we can certainly look at your physical assets and estimate the amount of coverage needed, for example, to replace your home in the event of a loss, and make recommendations for reasonable coverage limits. However, there is no way to know the extent of a potential loss in which you are liable, especially if personal injury in involved. When selecting liability limits on any sort of policy, I always advise the highest limits possible and make sure we discuss the importance of having an umbrella policy. Discuss with your agent various options for reducing costs. Your agent can review the available credits with a given company or give you suggestions for reducing costs without reducing your coverage.
Katherine Case: It’s hard to say how much coverage is enough, assessments balancing coverage and cost really should be done thoughtfully on a case by case basis. As for savings: bundle, bundle, and bundle! Generally you can get the best rates combining your coverages with one company. Companies often offer up to 25% off home/auto rates if you can place both with the same company. Other savings can be found with Defensive Driving Courses, Good Student Discounts, Driver Training, Students living 100+ mi from home without a vehicle, Security Systems, Generators and being a Non Smoker. Finally, credit rating is another big factor in your rate, the better your rating the better your insurance premium will be.
Deighan Wealth Advisors: In the interest of forming a great partnership with the insured, what would the insurance company (and agent) like the insureds to know?
Ashley Rosborough: Honesty and clear communication creates a foundation for a strong partnership between insured, agent, and company, while also ensuring the best and most accurate coverage. As independent agents we encourage clients or potential clients to contact us with questions about possible changes to their coverage or even just to chat about changes in their lives. Life gets busy for everyone, but keeping your insurance agent informed of changes as life evolves and time goes by can help ensure you don’t end up with anything falling through the cracks or “holes” in your coverage.
Katherine Case: In this age, more consumers are moving to the internet, bypassing their local agencies and missing out on valuable expertise and advice. An insurance agent can be your best advocate, and can help you not only select your company, but also mitigate claims. This is especially true with agents who have many years of experience representing multiple insurance companies. Also, agents welcome their clients to set up an appointment for an annual review of your insurances, because situations change over time and coverage should be current.
Deighan Wealth Advisors: Are there any misconceptions/myths you would like to address?
Katherine Case: The first myth that comes to mind is: “The color of my car affects my insurance rates!” Not so… rates are based on vehicle safety features and how much it costs to repair the vehicle. Another is, “My friend borrowed my vehicle so any damage would need to be taken care of by their insurance company!” Again, not so… if the vehicle is used with your permission, the coverage will follow the vehicle, not the driver. Finally, “I don’t have much for personal property so I don’t need renters insurance!” Be careful! Once you take stock of all your possessions, you will be surprised at how much you could lose. Moreover, don’t overlook the benefit of having Loss of Use coverage to pay for out of pocket costs in a loss such as temporary living accommodations & cost of eating at restaurants.
Ashley Rosborough: Perhaps because insurance is often a major expenses for many, I think there are some misconceptions about insurance companies being “crooks” only out to “gouge” people with their prices. In fact, many factors go the individual rates charged by each company, and things can change from year to year, both with the company or with the insured which can lead to confusion or frustration. We do our best to break down quotes or premium changes with insureds so they are aware of the reason behind changes when they occur. Although insurance can be a larger budgetary expense for most; from the agent perspective, I have seen many times how grateful people are that they had coverage in place when they are going through a loss covered by their insurance.
Deighan Wealth Advisors: Please answer the question we should have asked but did not.
Ashley Rosborough: “Why would someone go through an independent agent as opposed to going through a direct writer (directly through an insurance company) online?”
As an independent agent I represent several different companies that I have close relationships with and in whom I have a lot of confidence that they will treat their insured well. Our agency offers all lines of insurance so when I work with a client I act as their trusted advisor- someone who learns about who you are, and what the most important things in your life are that you need to protect. Then together we can find the best way- with the right companies, to make sure that your assets and those that depend on you are protected. Due to the recent increase in visibility of direct writers through catchy television and radio ads, many of which focus purely on saving money, some may think going through an independent agent will cost more but that isn’t the case. The independent agent’s purpose is to make sure you have the best. most accurate coverage you can afford, and that you understand it.
Katherine Case: I agree with Ashley’s comment on the role of the independent agent. One final last question might be, “What else can a local insurance agency help me with?” We can also insure your “toys” ATVs, Motorcycles, Travel Trailers, Motor Homes, Scooters, Golf Carts and Watercraft. This will not only protect your investment in these items, but also protect you from any liability that could arise when using them.
Deighan Wealth Advisors: Our takeaway: Make sure you have adequate homeowner’s coverage for your real estate holdings and all of your vehicles. You should also have umbrella coverage that properly connects to your homeowners and vehicle coverage to protect against the unlikely disastrous event that could clean out your savings. Don’t overlook your motorcycles, watercraft, and other fun vehicles. They should connect to your umbrella coverage as well. Consider consulting with an independent insurance agent who can help you comparison shop and make sure all of your coverage links up. No one wants to win the negative lottery and find themselves in the tough position of filing a significant claim. However if you do have to file a claim, having an advocate at your side will be worth its weight in gold.