(ALEXANDRIA, VA – Jan. 14, 2009) - It's a new year and Americans everywhere are thinking about finances in the slumping economy. While families are looking for ways to tighten their belts, they should also consider making an appointment with an insurance professional for a free insurance "makeover." In fact, almost twenty-four percent of households, representing about 39 million homeowners, say they have already made changes to their insurance coverage in the last year in an effort to reduce costs, according to a recent survey by the Independent Insurance Agents & Brokers of America (the Big “I”) and its local Trusted Choice® member agencies.
“The start of a new year is a perfect time to dust off your insurance policies and assess your needs and costs,” says Robert Rusbuldt Big “I” president and CEO. “A lot can happen in a year. You may now be wasting money on coverage that is no longer necessary or you might not realize where you are vulnerable to serious losses.”
Because there are so many types of insurance available today, consumers should sit down with a reputable insurance professional who can help sort through some of the confusion. Here are a few key questions and answers consumers may want to explore when looking to evaluate their coverage.
TOO MUCH COVERAGE IN TOUGH TIMES: How Can Consumers Save?
• Auto coverage: Due to the economic downturn, many Americans have lost their jobs. That means they may no longer commute or may have cut down significantly on the number of miles they put on their cars. Lower mileage can translate to lower premiums for some drivers. Talk to your agent about qualifying for a discount if your driving routine has changed.
• Coverage for Collectibles and Valuables: Many people, in need of extra cash, have been forced to sell jewelry, furs, art, antiques and other collectibles and specialty items. Since most of these items require additional coverage beyond the standard homeowners policy, these consumers need to tell their insurers when they no longer own the items so they are not paying for unneeded coverage. Savings could be considerable.
• Home Safety: It is important to note that certain home improvements such as security systems, upgraded wiring, and fire or storm resistant materials can result in insurance discounts. Let your agent know if you have made these types of changes in your home.
• Low Deductibles: The owners of an expensive home need to consider whether a low deductible makes sense. If someone steals the TV, it isn’t going break the bank. Those same consumers need lots of insurance for a total catastrophe, though. Therefore, they may want to take a $1,000 deductible, or even higher, and save 10 to 20%. In fact, increasing deductibles is one of the best and easiest ways for almost anyone to save money on their insurance.
• Insurance discounts: Just ask! They are readily available for consumers who combine family policies, use one insurance company for several types of coverage, or take other measures such as using theft deterrents or maintaining good driving records. This is a main reason why consumers should consult with an independent insurance agent at least once a year to evaluate changing needs and look for cost savings.
• Credit life insurance: As their cash flow declines, many consumers are forced to rely more on their credit cards. However, Trusted Choice® agencies recommend avoiding credit life insurance under any circumstances. These policies, offered by credit card companies and other lenders, extend for the term of the loan and decrease in value over its life. They are designed to protect a third party if for some reason, the consumer dies before the loan is paid off. They provide no protection to beneficiaries, only to the company that offered the credit or loan.
• Specific computer or hi-tech insurance policies: Though this coverage may seem like a good idea with the prevalence of electronic gadgets at home, a standard homeowners policy will cover most basic personal computer and hi-tech equipment. If you have a home with the structure insured for $100,000, you typically have $50,000 of personal property coverage, including computer equipment not used for business. Only people with home-based businesses, laptops used for business outside the home, or elaborate high-end equipment need to consider extra coverage. It’s usually cheaper, and you get better coverage, if you buy an endorsement to the home or home-business policy rather than a separate specific policy.
AT RISK IN TROUBLED TIMES: Where are insurance consumers especially vulnerable?
• Home-based businesses: With increased corporate layoffs, millions of Americans are operating full- or part-time businesses from their homes. If you rely on your homeowners policy as your only means of protection, you may find your business underinsured or uninsured in the event of a loss. These policies were never intended to cover business exposures. Consequently, coverage for the items you use in your business such as computers, filing cabinets, tools and inventory are limited to $2,500 in your home and $250 away from home under most policies. Your homeowners coverage provides no liability insurance for your home-based business. IIABA research has shown that at least 60% of in-home entrepreneurs are not properly insured.
• Home remodeling: In the depressed housing market, many homeowners have decided to stay put and make do with upgrades to their current properties. But home renovation can leave people vulnerable to risk. Too few consumers consider increasing their homeowners insurance limits to reflect the increased value of a remodeling job. Most insurance companies require homeowners to insure their home to a minimum of 80% of its replacement value to be eligible for full coverage. If coverage falls below that level and the homeowner experiences a loss, they will be penalized with a partial settlement. In addition, many people don't take basic steps to protect themselves from liability exposure while construction workers are in the home. Unfortunately, it is more common to find shoddy, unqualified, and uninsured contractors in a bad economic climate than when times are good. Consumers should always ask for a certificate of insurance from anyone employed in their home and seek advice from an insurance agent.
• Renters insurance: Those unable to afford homeownership during these uncertain times still have property and valuables they should protect. Renters insurance not only protects the contents of a rented property, but also shields the policyholder from liability. And it’s not expensive (because you’re not insuring the building -- that’s the landlord’s responsibility). A typical policy that offers $15,000 in property protection and $100,000-$300,000 in liability coverage can be as little as $200 a year.
• Your Home’s Value: Although the market value of your home may have decreased significantly in this economic environment, don’t make a quick decision to trim down your homeowners insurance coverage. It is important to remember that your homeowners coverage is not tied to market value, but to replacement cost (the cost of actually replacing or rebuilding the structure if disaster strikes). Construction, labor, and materials costs have remained relatively stable, even in this market. Don’t leave yourself underinsured.
• Employer-Sponsored Benefits: Are you taking full advantage of the life and health benefits offered by your employer? In this competitive market, some of these benefits are available at greatly reduced costs. That means you could possibility increase your coverage at a better rate than ever. Consult with your human resources officer or trusted insurance professional.
For more information about money-saving tips, or to speak with a Trusted Choice® agency spokesperson, please contact Sue Nester (broadcast), 703-706-5448, firstname.lastname@example.org or Margarita Tapia (print), 703-706-5374, email@example.com.
Trusted Choice® agencies are insurance and financial services firms. They represent multiple insurance companies, offering individuals and business owners a variety of coverage choices, customized insurance plans to meet specialized needs as well as advocacy support. These firms adhere to a pledge of performance, committing them to providing excellent customer service. Go to www.TrustedChoice.com and click on “Find a Trusted Choice® Agent” on the homepage to locate the right agency for your needs.
Founded in 1896, IIABA (the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com.