I recently scheduled a teleclass with my insurance agent and learned some interesting things about what’s new in personal insurance. According to George Frear of First Western Insurance in Rapid City, South Dakota, here are several things you might want to consider as possible updates to your insurance coverage:
1. Credit rating. The current industry trend is for insurance companies to verify an applicant’s credit score before issuing a policy. In some cases, a good credit score can reduce premiums by as much as 30%.
2. Vehicle loan gap coverage. If you lease a vehicle or buy a new one with no down payment, there may be a period of time when the car has a cash value less than the amount you owe on it. You can get gap insurance that will pay the difference in case the car is totaled.
3. Insurance for a short-term rental vehicle. Most travelers know that buying insurance on a rental car is usually unnecessary, as you are generally covered under your auto policy. This coverage, however, would not extend to anyone not listed on your policy who may drive the rental car. It also does not cover foreign countries except Canada. You may have some coverage in a foreign country through your credit card insurance, but it would only cover damage to the car, not liability.
4. Liability limits. Traditionally, liability limits are split between damage and liability and into varying maximum amounts per person and per accident. Some companies now also offer a single-limit option, with a maximum of $500,000 per accident for whatever combination of liability and property damage may be needed.
5. Ownership of vehicles by a trust. In recent years as this has become more common, insurance companies generally don’t have a problem covering both the trust as the owner of the vehicle and you as the driver.
6. Homeowner replacement coverage. A crucial issue with homeowner’s insurance is to make sure you have high enough coverage in case you have to rebuild your home. Most companies now offer an option of 25% or 50% more than the policy amount. The cost for this increased coverage is relatively small, with the 50% option increasing the premium by about 5%.
7. Contents of a home. Again, the crucial issue is whether you have coverage for actual cash value or replacement value—the difference between getting garage-sale prices or retail prices for your furniture. You also should talk to your agent about scheduling separately any valuable items such as jewelry, furs, firearms, or collectibles. And, of course, a photographic inventory of the contents of your home is extremely useful in case you ever need to file a claim for a catastrophic loss.
8. Homeowner’s coverage for people who don’t live in your home. Children who are full-time students but older than the age limit specified in your policy can still be covered. For a relatively small increase in your premium, you can add them to your policy so they will have liability coverage and protection for their personal property up to 10% of the amount of your coverage. In the same way, you can cover elderly parents or other relatives (such as grandparents, in-laws, aunts and uncles) who live in a retirement apartment, assisted living facility, or nursing home.
These are the highlights of what’s new with insurance; the complete audio of George’s presentation is available in the client-only section of our website at www.kahlerfinancial.com. His overall recommendation, of course, is to talk with your agent periodically to make sure your coverage is up to date and is appropriate for your needs.