Insurance World

The homeowner policy has so many benefits and features. The online shopper can get confused in all the details when trying to compare policies. There are some basic benefits and there are a variety supplemental benefits and riders. The rates are calculated based on two different methods of claim settlement. The homeowner needs to understand these two methods in order to select the appropriate policy.

Two Types of Claim Settlement

1.Actual Cash Value – This type of claim settlement uses depreciation when determining the amount paid after a loss. For example: If a property has a current replacement value of $100,000 and has depreciated by 30% due to age and use, the actual cash value of the property would be $70,000. Actual cash value policies are usually written on older homes that depreciate.

2.Replacement Cost – This type of claim settlement does not use depreciation. Replacement cost is defined as the cost to replace with like kind and quality at today’s replacement cost without any depreciation. Replacement cost policies are generally purchased on newer homes.

The next thing to consider is how to determine the proper value of your home. Insurance companies use a calculator to find the appropriate amount of insurance. It will make your online experience a lot easier if you can have some of these details available.

1.Square Footage – Insurance companies always use square footage to calculate replacement cost. The square footage is available on your appraisal.

2.Finished Basement – This adds to the replacement cost value of your home. What percentage of your basement is finished?

3.Detached Structures – The homeowner policy has protection for other structures. The amount of protection is 10% of the dwelling amount. You may need more added to this 10% if you have some larger detached structures.

There are other things to consider like air conditioning, decks, and fireplaces. These all add into the final calculation. There are discounts for smoke detectors, fire and burglar alarm systems. Please view our recommended insurers for details.

Every single driver in the U.S. is required to have Car Insurance. And most of drive around confident that we have adequate coverage to protect us should we ever be involved in an accident.

Yet, almost 97% of all drivers are not adequately protected….and don’t even know it. Here’s what I mean.

Let’s say you’re involved in an accident and it’s serious enough that the car is considered a “total loss” by your Insurance Company. Or, maybe your vehicle gets stolen. A few weeks later, you get a check from your Insurance Company.

When you look at the amount, you’re shocked. It’s thousands less than what you owe on your car. How can that be, you ask?

Well, like most, your policy has this short clause buried somewhere in all that legalese -

“In the event of a total loss, the policy holder will receive the actual cash value of the vehicle, minus any deductible.”

Did you catch the 3, very important words in that clause? The three words are - “actual cash value.”

Actual Cash Value means you’re going to get a get a check for….

“What it’s worth” not “What you owe.”

Isn’t that a nasty little surprise.

And like most, you owe quite a bit more than what the car or truck is worth. What would you owe your Bank or Credit Union if your car was totaled today?

So, how do you avoid this situation?

Well, when you buy a new or used vehicle, add a “rider” to your policy or purchase a separate “rider.”

If you have Homeowners or Rental insurance, a “rider” might sound familiar. For a homeowner’s policy, if you own expensive items, like fine jewelry, you need to add a rider to your policy. The reason - Insurance Companies won’t cover those types of items as part of a regular insurance policy.

So, you pay an extra $5 or $6 a month to have those items fully covered by the rider.”

If anything ever happens to the jewelry, it gets replaced.

A rider for your car or truck is called GAP Insurance or GAP Protection. It’s just like the rider for your Home - except it’s only for cars, vans, trucks or suv’s.

It covers “What You Owe”, not “What its worth.”

It doesn’t matter what the reason is - if it’s ever totaled due to theft, fire, accident, flood, tornado, vandalism, hurricane, it’s covered - and paid-in-full!

You can protect yourself four different ways.

1. Put at least 20%-30% down on any new or used car purchase to erase any gap;
2. Purchase a “Rider” - AKA GAP Insurance from your Car Insurance Company or Bank;
3. Purchase Gap Insurance from another Insurance Company;
4. Buy Gap Insurance from the Dealership you’re buying at.

Any one of these options is great way to protect yourself. Whether you’re getting ready to purchase a new car or truck, or purchased a vehicle in the last 2 years or so, make sure the “gap” between what your vehicle is worth and what you owe is covered.