Homeowners Risk Management. Presented by John Cole State Farm

Transcription

1 Homeowners Risk Management Presented by John Cole State Farm

2 Homeowners Insurance Issues How Much Cost/Administration Company/Agent Evaluation Consumer Rights

3 How Much? How much hhomeowners Insurance is enough? Depends on you, your lender, and your insurance company. Some good rules of thumb are g available.

4 How Much? First you must decide how much reimbursement you want for your property. Replacement Cost Actual Cash Value

5 How Much? Most companies use an 80% of value guideline for replacement cost coverage. Must use the proper value insurance value market value appraised value

6 How Much? Remember, most other property coverages are just a percentage of the amount of insurance on your dwelling. The amounts can usually be altered.

7 How Much? There are some optional coverages that may be important in some parts of the country. Sewer back-up Flood insurance Mine subsidence Earthquake insurance Guaranteed replacement cost coverage Personal property endorsement

8 How Much? You also have to think about Liability Insurance. Remember, Liability Insurance pays someone else. Would it be enough to pay me? or, Protect your ASSets!

9 Liability Insurance Remember, suing has replaced baseball as our national past time. Keep the insurance company interested.

10 Cost/Administration What effects the price of insurance? What can consumers do about it? How do I pay for it? What if I have a claim?

11 The Cost of Insurance Important factors in the cost include Geographic loss experience Type of construction Type of ffire protection ti House size Type of contents Condition of house

12 You can affect the cost Type of policy Size of deductible Optional coverages Discounts Company you choose

13 Discounts Many companies give premium discounts for some of the following factors. Check with your company. Smoke detectors Burglar alarms New wiring i Fire extinguishers Non-smoker Retired Multiple li l policies i

14 Company You Choose Every insurance company will have different experience and marketing ggoals. Shop Around!

15 How Do I Pay For It? Direct Payment Escrow

16 Direct Payment Like most other bills Your responsibility

17 Escrow Neutral third party handles the money and paperwork. Required by many lenders Required by FHA and VA

18 Escrow Accounts set up by your mortgage company Mortgage company then makes your payments this account

19 Escrow Payments The payments may include Mortgage principal pa and interest est Real estate taxes Homeowners insurance Mortgage insurance premium (PMI)

20 Escrow Warnings Check your annual statement to see if proper amounts are being withheld. Some people cancel/lose/forget homeowners insurance once their mortgage is paid off.

21 Required Homeowners Insurance? No law requires homeowners to purchase homeowners insurance. Lenders usually require it!

22 What if I don t buy Homeowners Insurance? With ihno loan, it is your choice. With a mortgage, your lender will buy it for you (Forced Placement). Usually not a good deal for consumers Expensive Less coverage Reinstate you old policy

23 What if I can t get Homeowners Insurance? In some places a homeowner may not be able to get homeowners insurance. Many states have the Fair Plan to help people in this situation.

24 FAIR Plan Fair Access to Insurance Requirements Never as comprehensive as a Homeowners policy

25 What if I have a Claim? The insurance company must do certain things But, there are duties for you too!

26 Insurance Company Responsibilities Must settle claim fairly Must settle claim a quickly as possible Must conform o to the contract c

27 Claim problems? If you are having problems getting your claim settled and your agent cannot help you then you should consider calling the Indiana Department of Insurance.

28 How do I choose and Insurance Agent?

29 Insurance Agent Choice License Check with state insurance department Knowledge Professional designations Continuing education Full-time or Part-timetime Ability to explain concepts

30 Insurance Agent Choice Commitment to Service Are they there when there are claims Commitment to the Community Ask others for references

31 Choosing an Insurance Company

32 Choosing an Insurance Company Price Service Type of company Stock or Mutual Reputation Ask friends and relatives

33 Choosing an Insurance Company Financial Strength A.M. Best Standard and Poors Moody s Weiss They don t evaluate quality

34 Choosing an Insurance Company Complaints Check with the Department on Insurance for complaints against an insurer. Remember, large insurers will probably have more complaints so don t rely on raw numbers alone.

35 Consumer Rights

36 Consumer Rights When you buy insurance. Apply for insurance - but you can be rejected Then go to your FAIR plan Contact your State regarding agent/company compliance

37 Non Licensed Companies You can buy from them but, They don t have a Certificate of Authority to do business in the state. They may not follow State laws and don t participate in the Guaranty Fund. Your lender may not let you buy insurance from them.

38 Guaranty Fund If your licensed insurance company goes out of business, becomes insolvent, any covered claims or unused premium will be paid by the Insurance Guaranty Fund up to statutory limits.

39 Contract Rights If accepted, you should get a policy in a reasonable time period. You have to read the policy to see if it is correct, make any changes, and ask any questions. There is no 10 day free look so there is never a 100% refund.

40 Contract Rights The time to figure out everything about your insurance is BEFORE ACLAIM. After a claim we tend to be less rational.

41 Terminating Coverage You can cancel your policy at any time You can let it expire, or You can cancel it when you want and possibly get a premium refund

42 Nonrenewal Your insurance company may choose not to renew your policy It expires at the end of the coverage period with no return of premium You have the right to receive a written notice of nonrenewal

43 Private Mortgage Insurance With less than 20% equity this may be required by the lender Doesn t last forever Get your house reappraised if the Get your house reappraised if the value has gone up

44 Flood Insurance Required if you live in a flood plain Not covered under standard homeowners insurance Sold by most insurance agents but it is a program of the Federal Government If you have questions call the National Flood Insurance Program at

45 Disability Insurance/Credit Insurance Disability is often ignored Greater chance of being disabled over a given time period than dying Watch what you are buying The definition of Disability is what is important

46 Credit Insurance Can pay your bills if you become disabled or die It can be very expensive

47 Life Insurance Mortgage Insurance Term Insurance Whole Life Insurance

48 Questions We have reached the end of the material. Before we proceed, are there any questions?