Wednesday, November 18, 2009

Do You Gamble?

Las Vegas. Monte Carlo, Casino Morongo. All great places to spend your hard earned money in the hopes of winning big. Let say that I am in no danger of becoming wealthy but what if you could get a $200,000 jackpot for a $1,600 bet? Would you do it? You probably would.

Now lets look at insurance. You pay your insurance carrier $600.00 for the year. Your house is insured at $250,000 for total rebuild including debris removal. Your house burns down. You pay your insurance carrier a $1,000 for your deductible. They rebuild the house and spend $200,000 doing it.

You just paid $1,600 for a $200,000 pay off. You won!

Want a bonus spin? Your insurance carrier helped pay your living expenses like rent where you lived while they put the house back up plus paid for your personal property that was destroyed or damaged in the fire as well. Lets say that rebuilding your home, replacing your personal property like clothes, TV, computer, etc. and the rent for 6 months while all this was getting done is $300,000. You only spent $1,600.

You might say you've paid for insurance for years and never had a claim so it must be a waste? I agree, it is a roll of the dice as to if you will have a fire, your home could get broken into or any number of other things could happen. But one day you might win.

Another thing to consider: If you had a fire or if someone drove into the house at 2 am, would you have the money to pay for the repairs yourself? How long would it take to put enough money in a savings account? You would have to pay taxes on the interest, have the will power not to touch it even for that new TV or for school clothes, and you would have to be able to get at it in the event of a major disaster. The insurance company set that money aside in the event you needed it. You where lucky when you did not need it. Someone else probably did. Now it's your turn.

$600 a year does not sound like to bad of an investment in your own security and peace of mind, does it?

Thursday, November 12, 2009

Windows 7 and other rants.

Microsoft's new operating system, Windows 7, is touted as being better than Windows Vista. For the most part that may be true. However Windows XP is still more reliable by most accounts. My rule of thumb with any new Microsoft product has been to wait 6 months to a year for them to give all the early adopters’ time to beta test and work out the bugs. Once it is stable, I'll climb reluctantly on board. Why do the bother with minimum operating specs? Anyone I know that has tried to get by with the minimum specs is always frustrated and not happy.

Another problem is that software makers really don't care how much memory they use or how much hard drive space they take up. They don't have to pay for it, they figure you can just upgrade since it does not cost them anything and after all, hard drives and memory are very affordable.

Something else that gets me. So many people are looking for jobs right now. Why not get rid of the infinite voicemail system that is supposed to be so efficient at getting you to the "right person" and just get me to them? You could hire more people to screen the calls, more people to provide help in the "right" department and cut down on the wear and tear on your 18 menu phone system. With that in mind check out the great web site This site rocks. I was able to get an actual live person at Verizon in less than 4 min.

What a modern age we live in!

Friday, November 6, 2009

The "M" Word and What It Can Mean To Your Insurance Company

With the great values in the housing market today, first time buyers and investors are finding some great deals.

One potential client asked for a quote this week on a home that happens to be a manufactured home. For those of you who are not familiar with this type of construction, the walls of the home and other parts are built at a factory, brought to the construction site and assembled. Instead of putting up one board at a time, you put up whole walls. Think of it like a puzzle being put together.

In many cases the homes are attached to a foundation such as a concrete slab, and placed on the county tax rolls like a traditional site built home. For most preferred insurance companies, if you have to use the "M" word (Manufactured) to describe the home; you have to insure it the same was a you would a mobile home in a trailer park. Most preferred companies won't insure manufactured or mobile homes. Companies that provide manufactured and mobile home insurance will sometimes insure them on the same policy type as a traditional home but allow for the differences in the homes construction method.

Why does it make a difference?

Well, let’s say you have a claim. There is a fire, a tree falls on the roof, some jolly drunk runs into the house at 2 am, take your pick. You insured the home on a traditional homeowner’s policy; your insurance carrier would probably discover in the course of repairing the damage to your home that it is a manufactured home. They don't insure manufactured homes. Your claim could be denied.

Now let’s say the tree, the drunk, or the fire happens and you are insured with a manufactured home policy. You are covered. You pay your deductible, the insurance carrier picks up the rest and after some hammer time your home is back up to having Aunt Gladys over for the holiday.

I understand that it's a pain to get insurance on a home. I listen to clients every day and explain to them why the insurance coverage on their home is more than what they are paying for it at today's real estate prices. My insurance on my own home has gone up this year to and I have never had a claim. I talk about rebuild cost, debris removal and all the things that could trigger a claim. I know that people are only looking at the price, not the benefit. I also know that when something happens, you are going to be wondering if you have coverage. It's better to insure you correctly in the long run. You pay your yearly premium and your deductible, in most cases about $1,600 on average for both ($600 for the yearly premium, $1,000 deductible), and the insurance company pays out tens of thousands or more depending on the claim. Not a bad trade if you ask me.

Think about people at a salad bar. Most will take lettuce, tomatoes, maybe a carrot or two or some bell pepper. Others will skip the carrots and go for baby corn, olives or radishes. Some may skip the salad altogether and go for the pasta, potato or macaroni salad instead. Insurance carriers are the same way. Some like traditional site built homes, good drivers, renters and landlords. Others like properties that may need a little work, have unique construction and drivers with 5 speeding tickets in the last year. Insurance is about matching your needs and potential liabilities with a carrier that will cover that risk.