Monday, April 20, 2009

Why meet your Insurance Agent for Annual Reviews?

The article below is reprinted here with the generous permission of its author, J.P. Gudka.

Why meet your Insurance Agent for Annual Reviews?
By J.P. GUDKA, Colorado Allstate Agent

You put a lot of time making your house a home filled with memories. Naturally, you want to protect your home. Whether you’re moving into a new house or protecting the one you have, Allstate homeowners insurance can help you keep your home safe.

Many people come to me with insurance already in place. Often they ask me to simply quote them the exact same coverage as they currently have so that they can make a price comparison. Although I understand why they want that, I usually never do and prefer instead to start a quote from scratch. The reason I do this is because I would never take for granted that the coverage someone already has is adequate for their needs!

As you know, life marches on. There are many things in one’s personal circumstances that can change. Needs change, insurable interests change. People buy things, they have children, they do additions, they inherit money, they get raises, they travel, they start new businesses, they get new jobs, they get laid off, their kids start driving etc. Hey, life happens and sometimes the furthest thing from their mind is to call their insurance agent and tell them about the changes!

The other side of that equation is that your insurance company’s programs change too! For example, Allstate rolled out a new product in the last 14 months that allows a homeowner to make claims and not get penalized for it, and for every year you do not make a claim, get some of your premium back. We do the same with the auto insurance. Allstate has a product that allows for accident forgiveness, cash back each year, and a gradually declining deductible for collision coverage.

I have found in many cases that our underwriting models have become more forgiving under certain circumstances and in some cases, not only can we give someone better coverage but do so at a much reduced rate!

I recently did an annual review for a client of mine. As it turns out, they had finished their basement and never told us about it. If the home was involved in a catastrophic loss, it is possible that there might not be enough coverage there to rebuild the home to its former condition. Also, due the rising costs and scarcity of certain natural resources, the cost to rebuild a home may be higher than it was when the policy was written.

Another family I met with was completely unaware that if their roof was damaged in a hail storm, their deductible would have been 2% of the building coverage. In their case, the home was insured for around $200,000. That meant that they would have had to pay $4,000 deductible for hail damage to repair their roof. In other words, with a cost to replace the roof at only $3500, there would have never been a need to make a claim for their roof. They might as well have been self insured….

People tell me that they are very concerned about the cost of their insurance with the economy being the way it is right now. Everyone needs to cut expenses and save money where they can. Your auto insurance may be one place you can save quite a bit.

Do you know that in Colorado, every time you get behind the wheel of your car, you are taking your entire financial future and putting it at risk? The real reason to have auto insurance isn’t because you love your car and want to make sure it gets repaired or replaced in an accident. Let’s face it, a car is metal, plastic and glass. Unless its an antique or collector’s item, all it’s parts can be found or replaced.

No, the real reason you want auto insurance is for the Liability coverage. You see, Colorado is a tort state. That means that it is lawyer vs. lawyer. If you are in an accident and are found to be at fault, it is within the right of the injured party to collect damages. That means that they can take you to court to collect their losses. These losses are not just limited to buying them a new car. They can include medical costs, lost wages, and pain and suffering. The great thing about auto insurance liability coverage is that your insurance company will represent you in court and will do so up to the limits of your policy.

Please do yourself a favor and make sure you are properly protecting your family from catastrophic losses. Going with a higher deductible for the auto protection can often more than compensate for the extra cost of giving yourself better protection for your 401K, IRA’s, equity in your home, college savings plans, and perhaps even your business if you are self employed.

Here are some good questions to ask your current carrier:

How do I determine how much coverage I need?

Start with the basics. The standard Allstate Homeowner policy covers them. But maybe you have some special insurance needs – your wedding ring or a couple of mountain bikes. Your policy covers these items too, but you may need more than basic coverage for them.

What is “optional coverage”?
You can buy extra coverage to help protect your jewelry, tools, sports equipment, rental income and more.

Do I get a homeowners discount if I have auto coverage from the same carrier?
Most of our homeowner rate plans offer a multi-policy discount.

I know with auto insurance, good driver discounts are available. Are there similar rewards for homeowner policies?
Customers should contact their agencies to determine if they qualify for any discounts or can increase their deductibles.

Will raising my deductible lower my rate?
Typically, raising the deductible on your policy will lower your rate. It’s important to keep in mind that you should carefully evaluate any changes to your deductible since it can affect loss settlement and you as the customer will have to absorb more of the loss.

For more information, please contact Allstate Agent J.P. “Good Hands” Gudka at 303-752-2999.

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