Friday, July 29, 2011

Square Pegs in Round Holes.

Insurance is kinda odd at times. Trying to find the right carrier for a client and their property can be a challenge. Especially if the home was custom built.

Carriers are like people at your local salad bar. Some like olives in their salad, others want iceberg and mayo, and still others are allergic to beets.

Some carriers would not even consider a home built before 1950, others will, and some can't get enough of them. It is frustrating for clients purchasing insurance, frustrating for the agent too. All we want is a square hole to put the peg in, a policy that meets the clients and the properties needs.

When shopping for insurance, answer your agents questions honestly. If you don't understand something, ask them to explain the question. Remember, an inspector will come out to look at your home and report back to the underwriter first, then underwritting will make the report avalible to your agent. It's worth it to take your time, give an accurate picture of your home and any claims.

Friday, July 22, 2011

What if S & P and others Downgrade Insurance Carriers?

With the government seeming to want to wait for 11th hour politics to kick in on the debt negotiations, Standard and Poors rating services has threatened to lower their ratings for insurance carriers, securities brokers, mortgage bankers and other financial firms if Congress and the President don't agree on a plan in time.

So what if they do? Didn't they and other ratings services say AIG and other big wall street companies were solid until the day they crashed? Yes, they did. And yes there are still parts of the financial world that take into account the S&P's rating of a particular financial investment before they will buy it or grant credit.

My thought on this is that if the S&P, etal., lower the rating of these companies, including Fannie Mae and Freddie Mac, it will make it harder to get loans and credit. I don't think that it will have that much impact on world trade unless the the government does default, even if just for a few days. Many countries are in financial turmoil right now through out the world. There are other ratings methods and ratings companies as well as measures of how a company or a country is doing. We have to take the bad with the good and look at the whole picture.

As for property and casualty insurance carriers, California and many other states have fiscal solvency requirements for those carriers doing business in the state as admitted carriers. A company has to do more than be able to pay all its policies in the state. They have to have reserves over and above their operating costs. I don't look for your homeowners insurance carrier to be seriously affected by what the ratings services do.

Thursday, July 14, 2011

What do I need to know before I cancel my policy?

If you have an insurance policy of any kind and are thinking of canceling it for any reason, think about the following:

1. Am I replacing the policy? If you are just switching carriers, look at the new policy that you are switching to. Does it provide the same or better coverage limits? What is the cost difference? I've seen people cancel a policy, go to a new carrier, pay $30 less a year and loose $80,000 in coverage. Think about it before you act.

2.  If you are canceling the policy and not replacing it, think again! You are required to have minimum auto coverage for your state. Here in California and elsewhere, the carrier is required to notify the Dept. of Motor Vehicles of any changes in your policy. If you do not have coverage, you could have your vehicle registration suspended. If you have a loan on the property, the lender will usually require you to have insurance on it for the life of the loan. They can force place coverage to protect themselves (Tell Me More).

3. When will my new coverage take effect? If you cancel your insurance today and your new policy does not go into effect for 2 days, and something happens tomorrow, you could be stuck without any coverage. I hope you have one honey of a savings next egg built up.

4. Do I get a refund? In some cases you could be canceling your policy during the current coverage term (mid-term cancellation is what it's called). Your carrier will then owe you a refund for any paid but unused premium. Most carriers pro-rate your refund based on how many days you were covered under the policy, how many days are left in the policy term and any fees due to the carrier. If you are pretty close to your renewal date, you may want to wait.  Refund policies and calculation methods vary carrier to carrier, so you may want to check with your carrier.  

5. Have you been with the same carrier or agent for years? Call your agent and ask them if there are any other carriers that may have appropriate coverage. Some carriers will let your agent cancel the current policy and re-write it, which can also lower costs.

Keep in mind that insurance is a way to begin to rebuild your life after a loss. It's not there to make you rich, pay for simple repairs, or to make your life more difficult (although I do wonder on that last bit!) . It's a way to have access to money that you may not normally have in an emergency.