One of the things people rarely pay much attention to when they buy a property is whether they have adequate dwelling hazard and liability insurance, otherwise known as homeowner's insurance.
Getting a policy is easy and almost always obtained when someone closes escrow on their home or rental property. But is it the right type and amount of insurance? Most people reading this article probably would admit that they have no idea about their homeowner's coverage, but they should know, considering it protects their largest asset.
Let's run through a few basics so that you can help yourself understand your policy and ensure you have the proper coverage in place for your needs. Go head and pull out your insurance policy binder, it's about 40 pages thick, then flip to the third or fourth page that contains line items like: Building/Dwelling, Separate Structures, Personal Property, Loss of Use, Medical, and Extended Replacement. This section also includes corresponding amounts of maximum coverage, which tells you how much coverage you have in case of a loss. You need to look at each line item of coverage and discuss with your agent if you believe that amount is sufficient.
Call Pachuta Insurance today @ 706-769-2262 for the best homeowners insurance in Athens, Ga.
Building / dwelling coverage
The top item is usually for building/dwelling/property and that covers the cost to rebuild your property for covered perils like fire, wind damage, vandalism, etc. The coverage is based on your selected estimate of the cost to rebuild the structure, not the land value as land rarely gets destroyed and regardless is not covered by insurance. Additionally, your normal policy does not cover earthquakes or floods, either, but you can get separate policies for these if you are in earthquake or flood-prone areas. Policies for these perils can be expensive, but you decide if it's worth it. Other items are also not covered like wear and tear, so talk to your agent about what is and what isn't covered.
While your agent can help you estimate how much coverage you need for one of the line items like building/dwelling (e.g., $400,000 coverage for a 2,500 square foot house based on the size, quality of building materials, age of property, etc), you ultimately pick the dollar amount of coverage. Don't under-insure, but don't over-insure, either. Most important is to make sure to review your policy each year and increase your coverage to an appropriate amount if local building costs increase.
Many people don't know this, but you also have liability coverage with your homeowner's policy. For example, if your dog bites someone or if someone slips on your property and gets hurt and you get sued, the insurance provider will step in and pay for a lawyer to defend you and/or pay any settlement or judgment against you. But that coverage has a limit of how much they will pay, usually about $300,000. If you have net worth above that, you can buy additional liability coverage called an umbrella policy in increments of $1,000,000 of additional coverage. It's dirt cheap, too, like $350 per year for an additional million dollars in coverage, so go for it if you think you need it.
The deductible amount is chosen by you. A deductible is how much you pay out of pocket for a loss. If you have a $500 deductible, and there is a $7,500 loss, you pay the first $500 and the insurance carrier pays the other $7,000 up to your maximum covered loss. The higher the deductible you choose, the lower the annual insurance premium you pay. Likewise, the lower the deductible, the higher the annual insurance premium you pay. Discuss this with your insurance professional and decide what makes sense for you.
HOA/common interest development properties
If you own a unit in a condominium, townhome, co-op, PUD or any other common interest development, whether a personal residence or an investment property, make sure you have an interior HO-6 policy that covers you for damage to the inside of your unit, PLUS for liability. This isn't covered by most homeowners association's master insurance policy.
You don't want to wait until you or your tenant accidentally floods the nine units below you and every one of those nine owners is looking to you to reimburse them for their losses. Your HO-6 policy should cover this liability and damage – discuss the coverage with your agent. You should also get a copy of your HOA's master insurance policy and meet with your personal insurance agent to determine if there are any gaps in coverage.
Additionally, normal policies don't cover expensive jewelry, artwork, firearms, precious metals, etc. If you have expensive "other" items, make sure to discuss these with your agent and get the proper coverage in place.
The last item to note is that insurance is for major financial losses that will cause a disruption to your life and livelihood if you did not have the coverage in place to pay for all the damage. You generally should not make small claims because the insurance carriers will raise your rates and/or eventually if you make enough minor claims they may drop you from coverage. Reserve making claims for when everything hits the fan.
Having the proper type and amount of insurance in place is vital in today's world. Pull out your policy and schedule a talk with your agent to discuss what you have and what you need. This should help you sleep better at night by knowing if there is a big loss, you've got some help on your side.
Leonard Baron, MBA, CPA, is a San Diego State University Lecturer, a Zillow Blogger, the author of several books including "Real Estate Ownership, Investment and Due Diligence 101 – A Smarter Way to Buy Real Estate", and loves kicking the tires of a good piece of dirt! See more at Professor Baron.com.Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.
This time of year in Athens, Georgia the city is bursting at the seems with students, faculty, and families who are all associated with the University of Georgia in some form or fashion.
When school starts in the fall, the population here in Athens grows considerably. And along with all the people flooding back into Athens, there is an equal substantial increase in the number of vehicles on the road.
And you can pretty much quadruple that number when it's game day here in Athens.
Call Pachuta Insurance today @ 706-769-2262 for auto insurance in Athens.
So what happens if you are driving through Athens on Saturday, waiting for the Georgia Bulldogs to kick off, and suddenly you find yourself in an auto accident?
You may have never been in an accident before, nor are you sure exactly what to do.
So we've put together these 7 tips for what you need to do if you find yourself in an auto accident while driving through Athens.
#1) Stay calm
If you find yourself in an accident here in Athens, the first thing you need to do is stay calm. Get excited, frustrated, or flustered will only exasperate an already tense situation.
#2) Call the police
After you've gotten a grip, you now need to go ahead and call the police to the scene. This is very important because the insurance company is going to require a copy of the police report.
#3) Get off the road
Now you want to make sure you move yours, and if there is another car involved, there's, vehicle from the road. There's no reason to clog up the roadway with your vehicles.
#4) exchange information
Make sure, if you are in an accident with other drivers, that you exchange information with the other drivers. The type of information you need is their name, phone number, email address, and insurance company information. Again, very important information when it comes to filing a claim.
#5) Call your insurance company
Now you want to make sure you call your insurance company. This is something that is critically important because, since you are the one paying for insurance, you need to take advantage of whatever entitlements are coming to you to take care of whatever damage was incurred during the accident.
#6) take photos
While you are at the scene, and after you've moved your vehicles out of the way, you should go ahead and take some photos of the accident scene. Taking photos of your vehicle, and the other party's vehicle, can help the insurance claim process move forward more efficiently.
#7) Get a copy of the police report
Finally, you need to make sure you get a copy of the police report. Again, your insurance company is going to require this report be made available in order to conduct a proper investigation of the accident and to help the insurance company in determining how to proceed with the insurance claims.
What are some other tips you can think of that relate to things you can do if you are in an auto accident?
When shopping for car insurance, the unfamiliar names and functions of major coverage can read like ancient Sanskrit. Collision sounds self-explanatory enough, but what's up with "comprehensive" and "uninsured/underinsured motorist"?
We asked three auto insurance experts to break down the standard policy to help you purchase the coverage you need at a price you can afford.
Our auto insurance guide ranks each coverage type by its relative urgency to the consumer by a red, orange or yellow designation. Red is most urgent, and yellow is least urgent. While each is an important tool to cover the legal and financial risks of owning a vehicle, it's unwise to skimp on coverage types in the red zone.
"I encourage people to think about auto insurance not from the premium that's on their renewal notice but from what they're trying to protect, what their need is and what their risk tolerance is in certain areas," says Jim Quade, assistant vice president of Liberty Mutual Insurance in Boston. "Then, imagine having a loss, and think about what you would expect your insurance company to do."
Ready to roll? Let's break down a standard car insurance policy into layman's terms and discover ways to save you money without costing you your coverage.
Liability insurance to protect your assets
Liability coverage pays for bodily injury and property damage that you, your family or friends cause while driving your car as well as legal and court costs if you're sued in an accident.
Our three experts unanimously place liability in the red zone.
"It's the coverage that is going to protect your assets and earning potential if you're in a bad accident," says Mike Schmisek, a Farmers Insurance agent in Denver. "People can survive financially after totaling their car, but they can't survive a lawsuit after killing somebody."
Skimping on liability coverage in your auto insurance doesn't make sense, according to H.Q. La, a State Farm agent in Portland, Ore. "With lawsuits today, even if you doubled the amount of liability you now carry, the cost is just a fraction of what people think it will be. Typically, you're talking about less than $50 more every six months to double your current liability coverage."
Call Pachuta Insurance today @ 706-769-2262 for auto insurance in Athens.
Comprehensive coverage for the unexpected
Comprehensive, or "comp," coverage pays for damage to your vehicle not caused by a collision. Typical covered perils include wind, hail, flood, theft, vandalism, fire and impact with animals. Comprehensive coverage doesn't always include a deductible.
La says your need for comprehensive car insurance may vary, depending on your location, financial circumstances, and the age and value of your vehicle.
"Where there's a deductible built in, you can choose a higher deductible. Comprehensive does not have to do with a person's driving record, and it's relatively a lot cheaper than collision coverage," he says.
Quade agrees. "Because of the (affordable) cost of comprehensive, most people make that the last coverage to drop," he says.
Some companies allow you to carry comprehensive car insurance alone, and others require you to carry comp with your collision coverage.
"If you lease your vehicle, (the lender is) going to require you to have both comp and collision," La says. "They want to protect their interest."
Collision coverage for older cars?
Collision pays to repair damage to your car above a deductible amount when it strikes or is struck by another vehicle or object.
How important is collision?
"It depends on the cost and age of the car, how much it's going to cost to repair it, and whether or not you can afford to fix it by yourself without collision coverage," State Farm's La says.
As your car ages and/or declines in value, you may want to increase your deductible to lower your premium or drop collision altogether from your auto insurance.
"Typically, people will drop collision before they will drop comprehensive on an older vehicle, particularly if their driving record and circumstances causes their average premium to be a little bit higher," Liberty Mutual's Quade says.
"If you lease your vehicle, however, your lender will likely require comprehensive and collision, and may even set the amount of your deductible," he says.
Payments for costly medical attention
Coverage: Medical payments
Medical-payments coverage pays for necessary and reasonable medical expenses for you, your family and passengers in your vehicle who are injured in an auto accident, regardless of who caused the wreck. You choose the coverage limits.
"Medical really depends on your situation," says Schmisek of Farmers Insurance. "If you don't have health insurance, I'd move it to the red zone and carry the maximum amount that the company will allow."
Quade says the type of driving you do could affect your need for medical coverage as part of your car insurance.
"If you carpool a lot, it can become important to carry a higher medical-payments deductible to ensure that anyone who is injured in your car, especially children, have the medical attention they need," Quade says. "If you loan the vehicle out to somebody and they're injured, medical payment can kick in for those individuals because insurance follows the vehicle."
Cover the risk of uninsured motorists
Coverage: Uninsured/underinsured motorist
Uninsured/underinsured motorist coverage, or UM/UIM, primarily pays for bodily injury stemming from an accident caused by a driver who does not have or has insufficient auto liability coverage.
The increased risk of being hit by an uninsured or underinsured driver today has pushed UM/UIM into the red zone in recent years.
"Depending on the state you live in, 30 percent of the people could be driving without insurance due to the economy," La says. "If they hit you and you don't have that coverage, your injuries are not going to be paid for, your passengers' injuries are not going to be paid for, and your car is not going to be covered. Even if you're hit by someone who has insurance, a lot of times they might not have enough insurance to cover the injuries or damages you sustain."
Quade says a good rule of thumb is to match your UM/UIM coverage to the bodily injury limits of your auto insurance liability coverage.
That shouldn't bust your budget. "Uninsured motorist is by far the least expensive of all the coverages," La says. "A lot of times, it's like $1 a month. You won't even notice it."
What if you need road service?
Coverage: Emergency road service
Rating: Light yellow
Car rental coverage pays for the cost of a rental car if yours is not drivable due to a covered loss such as an accident. Emergency road service pays for such conveniences as towing, roadside assistance and locksmith service.
Our experts agree that while these car insurance coverage options might seem like luxuries, they can prove cost-effective for many drivers.
"They're inexpensive coverages that are nice to have, especially if you have an older car where you're more likely to use it," says State Farm's La. "You're talking about less than $1 a month usually, and all it takes is one claim to more than pay for the coverage itself."
Liberty Mutual's Quade offers this tip if you're considering car rental coverage. "Ask what kind of car you'll get with the coverage because oftentimes people are surprised that, when their Chevy Suburban is in the shop, they're left to cart their family of six around in a subcompact."
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