Smart Coverage for Smart Gadgets

Exciting news from this year's Consumer Electronics Show in Las Vegas - your new appliances may be "smarter" than you!   In addition, they will communicate with each other and you, via your smart phone.  Your refrigerator will be able to suggest recipes based on what you have in the fridge, your washer will recommend a cycle to get a stain out and your robotic vacuum will sweep the living room on your way home from work.  Rosey the robot maid, step aside! Even George Jetson's home wasn't this automated.

All of this smart technology is great when it works and frustrating as all getout when it doesn't.  Even worse, when smart technology breaks down or is damaged to the point of replacement, our wallets begin to "smart"!

The Insurance Information Institute reports that in 2011, the average claim for power surges to high dollar electronics was $5,112. However, most home policies will not cover damage to appliances caused by a power surge, not to mention the lack of coverage when the equipment has a mechanical or electrical breakdown.  

What's a "smart" consumer supposed to do? One solution is to make sure your emergency fund can handle the cost to replace one of these items when it is damaged. Unfortunately, when all of your electronics are networked together, the damage to one may lead to damage to the others. That may wipe out your emergency fund! 

Others may consider purchasing manufacturer warranties with their new electronics.  A recent article entitled "Extended Warranties" from ConsumerReports.org, advises that these service plans are "cash cows" for the retailer and "bad investments" for the consumer.  If you are going to purchase a warranty, be sure to investigate it fully.

A third option is an enhancement that you can add to your homeowners policy called "equipment breakdown".   Many innovative insurance companies are offering it for less than $50 per year.  This coverage can secure protection for your appliances and home systems from power surge, breakdowns and other losses that are not specifically stated in the policy contract.

This unique coverage extension is convenient and seamless — there are no separate warranty programs or fees to manage. And, best of all, you’ll have peace of mind knowing you’re covered for mechanical and electrical breakdown of your favorite gadgets, including:

• Flat screen, plasma and 3D televisions
• Computer and peripheral equipment
• Washers, refrigerators, ovens
• Freezer units
• High-efficiency home heating and central AC systems
• Home security systems

As you contemplate adding more gadgets to your futuristic utopia called home, contact your Trusted Choice Agent to discuss your options for adequately covering these items on your home, condo or renters policy.   It's the smart thing to do. 

A Tale of Two Policies - Home vs. Flood

The wrath of Hurricane Sandy will forever live in our minds.  One of the saddest tales that recently came to light, was that of the town of Breezy Point, NY.  Breezy Point, sometimes referred to as the "Irish Riviera", incurred not only devastating wind and water damage from Hurricane Sandy, but also lost more than 100 homes to fire. Preliminary reports indicate a transformer may have sparked the fire while Sandy's torrential winds spread the fire through five blocks of homes.  Thankfully, not one life was lost to those fires.

A news reporter interviewed one of Breezy Point's displaced residents, who indicated that his home was destroyed by the fire while his son's home was ravaged by flooding.  Both families were eager to be able to visit their "homes" and begin any salvage and cleanup operations.

Enter the Insurance Geek, aka, me.  What a different path each of these two families will encounter as they start the claim process through the home insurance policy (fire claim) versus the flood insurance policy (flood claim).

Additional Living Expense - This coverage will pay for expenses for the family to live in a hotel, eat meals at a restaurant, rent an apartment, even pay for family pets to stay at a "pet hotel".  A typical homeowners policy provides this coverage, above and beyond the amount of insurance on the home and contents.  A flood policy specifically excludes this coverage.

Finished Basement/Family Room and Its Contents - A typical homeowners policy will pay to replace the paneling, bookcases, carpeting, "mancave" and furnishings, including the flat screen, comfy recliner, etc.  A flood policy provides limited coverage in the basement area.  Flood insurance will pay for damaged structural elements and essential equipment; i.e. central air units, furnaces, washers and dryers.

Deductible - A deductible is the amount of dollars the claim must exceed before the insurance company will participate in the claim.  A typical homeowners policy has a flat deductible that applies to all instances of one claim.  Some homeowner policies carry a separate wind deductible that is a % of the dwelling amount.  Flood insurance has a flat deductible that applies to each instance of a claim.  In other words, the deductible will apply to the dwelling claim and separately to the contents claim.

Valuation - Replacement versus Depreciated Value  -   Both policies require that the homeowner insure the building to at least 80% of what it would take to replace the dwelling.  Once that provision is met, the typical homeowner policy will pay up to policy limits.  Many home insurance companies offer "Additional Replacement Cost" coverage that will increase their maximum amount of coverage by 25%, 50% and in some cases, a "guarantee" to replace the home, whatever it costs.  The flood policy, however, only allows the insured to purchase up to $250,000 coverage.  So, if the home requires more than $250,000 coverage to replace it, the flood policy will not answer.

Contents - A typical homeowners policy will cover contents on a replacement cost basis.  The flood policy has no provision for replacement cost on contents.  The flood policy always provides depreciated coverage on contents.

Many Americans affected by Hurricane Sandy, will begin their travels in this tale of two policies.  For all of us, though, it is a good time to discuss insurance needs and expectations with a Trusted Choice Agent.   Spend some time assessing the replacement cost estimate of your home by visiting AccuCoverage.com.   Enlist the assistance of your mobile devices to document your contents using an inventory app like "Know Your Stuff".   As evidenced by Sandy, we never know when and what type of catastrophe may hit our home.

To quote Charles Dickens from his famous novel A Tale of Two Cities,

“Then tell Wind and Fire where to stop," returned madame; "but don't tell me.”

Tornadoes and Windstorms and Hail, Oh My!

To steal a line from the Cowardly Lion in "The Wizard of Oz", "Unusual weather we're having, ain't it?"

Have you budgeted for increased home insurance premiums this year?  If you haven't, you darn well should.  Here are some staggering statistics from the National Oceanic and Atmospheric Administration regarding our favorite Commonwealth of Kentucky as of July 30, 2012.  (NOAA) 

·         Kentucky ranks 3rd in the nation for overall weather related events (combines, wind hail, and tornado activity)

·         Kentucky has experienced 63 Tornadoes – which also ranks 3rd to Texas and Kansas.

·        Kentucky is ranked 2nd in Wind events – behind Texas which is 268,820 square miles – compared to KY which comes in at a mire 40,409 square miles.

"Toto, I've got a feeling we're not in Kansas anymore."  

Insurance companies are raising premiums, increasing deductibles and, in general, being very picky about whose homes they even want to insure!  What can you do?

1. Talk to your Trusted Choice Agent.  With access to multiple insurance companies, the Trusted Choice Agent can compare policies and premiums for you.
2. Increase your current home insurance deductible to at least $1,000.  Ask for the savings to go even higher.
3. Do your part to minimize the chance of ANY damage happening at your home:
• Invest in smoke detectors, burglar alarms and dead bolt locks.
• If you have water backup problems in the basement, install a sump pump.
• Clean the lint filter in your dryer after each and every use
• Check and replace those standard rubber hoses on your washing machine with steel braided reinforced hoses.  

Kentuckians, your home is one of your most valuable possessions.  Use your brain to prevent claims, your courage to talk to your agent about your options and your heart to protect what you love.  "Oh, Auntie Em, there's no place like home."    

Three's Company, Too!

When the tv show "Three's Company" aired in 1977, no one but an insurance nerd like me worried about the insurance implications of unrelated people living together.  "I wonder if Jack, Janet and Chrissy each had their own renters policy to cover their belongings?"  

Today, about 1/3 of married people in the US have cohabitated.  A recent study reveals that people who cohabit with just one person and then marry that person go on to accumulate wealth at double the rate of people who marry without cohabiting.  No wonder cohabitation is on the rise!

Seriously, there are many types of living arrangements these days:

• Cohabitation couples (AKA significant other)
• Boomerang "kids" moving home with parents
• Aging parents moving in with adult children
• Grandkids being raised by grandparents

Does your insurance agent know about these living arrangements?  There are significant coverage implications that need to be addressed, before an uninsured claim arises.  

Let's talk about your home insurance which covers your property and provides liability insurance in case someone sues you.  Everyone that lives in your household is covered, right?  WRONG.

Most homeowner policies cover "you" (person named in the policy), your resident spouse, any resident relatives and any persons under the age of 21 that are in your care.

So, on a basic home policy, your live-in (no matter the gender) is not covered.  Likewise, if your spouse moves out, he/she is not covered.  

The other scenarios listed above will have coverage under the homeowners policy as long as the individual's legal address is the same as yours and they are a relative.  (Note - relative is NOT defined in the home policy.)

Bottom line, talk to your TrustedAdvisor about the individuals living at your home and what type of coverage they have and what they may need.  Affordable solutions are available.

Next time, we'll talk about your auto policy and how living arrangements and policy language determine who has what type of coverage.