Earthquake Coverage

While we don't live in California, with a constant barrage of information, warnings, and occurences, it is not unknown to the Midwest to have devastating earthquakes occur.

The fault line that we are most concerned with in this region of the US is the New Madrid fault line.  This fault line and Seismic Zone runs between St. Louis and Memphis.

According to some "Danger Zone" maps, most of Iowa would feel the seismic activity while indoors, while Southeastern Iowa could actually have unstable objects overturned.

While it may not lead to the same type of damage seen in California, a substantial amount of property damage could very well be evident in or around Iowa.  Unfortunately, earthquake coverage is not an automatic coverage on your homeowners policy.  It is an endorsement that can be added to your policy and normally functions with a percentage deductible.  By this, a person can have earthquake coverage at a 5% deductible, where the percent derived from your total dwelling coverage.  For example, if your home is insured to $100,000, your 5% deductible would be $5,000.

The cost of this endorsement ranges from company to company along with deductible options but is typically between $40 - $80 per year for this additional coverage being added to your existing homeowners policy.  Call your Absolute Agent for further coverage details.

Water Back-up of Sewers and Drains

As spring rolls in to an already saturated Iowa, make sure you know your risk for Water Back-up of Drains.

Water Back-up of Sewers and Drains is an optional endorsement on a standard home insurance policy that provides coverage in the event of water or sewage backing up through the drains or in the event of sump pump failure.  Neither of which are covered perils on a standard home insurance policy.

Typically, the cost for this coverage ranges between $40-$80 per year per $5,000 in coverage and some companies require that a sump pump be present in order to secure this type of coverage.  Also, many companies will not allow a current client to add the coverage during the term of the policy.  In these cases, it can be added at the time of renewal.  Other companies will have a 30 day waiting period before the coverage takes effect after the endorsement is issued.

The coverage provided is broad in nature and will cover contents, structural damage, and clean up.  Some companies have different deductibles for this type of coverage from the Named Perils deductible that shows on the Declaration page of your Home Insurance Policy.  There are some companies, however, that maintain the same deductible across the board.  Contact your Absolute Agent for further coverage questions and deductible options if you already have the endorsement in place.

Home Claims: How to Keep An Inventory

Keep an inventory of your belongings and updating it periodically is an important aspect to ensuring that the insurance company and properly compensate you for the loss of those belongings at the correct replacement cost.

Some individuals do so with simply keeping a written log of such in a safety deposit box in a bank or at a trusted residence outside their home.  Others will do about the same with photos and video.  These are all great examples of how to protect yourself from a low ball bid from an Insurance Adjuster, or to keep the supplemental checks to a minimum.

Now, as people and society is becoming increasingly paperless, there is a new way to create and save a household inventory.  At www.knowyourstuff.org, individuals can keep a running log of their belongings and can be stored on your home computer or laptop.

This is a very helpful website that not only can help you in the creation of the inventory (there is a short video you may watch that shows the proper steps), the site can actually store the inventory in a secured "Vault".  This software makes creating a home inventory fun and easy.  Once you have completed your inventory, it is easy to keep your information up-to-date.

However it gets done, it is very important to keep and maintain a household inventory.  While insurance companies usually don't have any problems with that which is "usual and customary" additional items and rather unusual items may be disputed.  As a small caution to this, even though you may have an inventory on all your jewelry, guns, and artwork, that does not necessarily mean that you have adequate coverage.  Those items will still need to be scheduled separately to ensure that they are covered to the full replacement cost.

Scheduled Personal Property Coverage

This blog post focuses on Scheduled Personal Property (SPP) and how to insure it properly for the full replacement value.

As most readers already know, your home insurance covers personal property at a certain percentage of your dwelling coverage.  This percent is usually set at 70%, so if you have a $100,000 policy on your home, then your contents are covered up to $70,000.  While this is good coverage, there are limitations placed on certain types of property.  These types of property include (but not limited to):

• Jewelry
• Guns
• Artwork
• Antiques
• Currency

Some of these limits are as low as $1,500 in total per class of items.  Also at stake when looking at these items is that they will fall under the total household deductible.  By this, if your $5,000 wedding ring was stolen, then the company would pay up to the $1,500 minus your deductible (nowadays, a standard home insurance deductible is $1,000).  By this, you would not be able to replace the ring with like kind and quality.  An easy way to get these to replacement value is to get an appraisal for each item that would exceed (or come close to) the limit and get it over to your Absolute Agent.  Not only will the pieces be insured to that value, but they would have a separate deductible of your choosing.  Give us a call today.

September is Life Insurance Awareness Month

You may not like to think about it, but your death can be costly to your loved ones.  At the very least, there will be funeral and burial costs.  There may also be estate taxes and outstanding debts to pay, such as medical expenses not covered by health insurance.  If you have dependents, they will have to cope with these costs while not longer having your income to rely on.

Why buy life insurance?

Many financial experts consider life insurance to be the cornerstone of sound financial planning.  It is generally a cost-effective way to provide for your loved ones after you are gone.  It can be an important tool in the following ways:

• Income Replacement:  For most people, their key economic asset is their ability to earn a living.  Proceeds from a life insurance policy can help supplement retirement income.  This can be especially useful if the benefits of your surviving spouse will be reduced after you death.
• Pay off debts:  Consider life insurance so that you loved ones have the money to offset burial costs, credit card debt, and medical expenses, etc.  Life insurance can (also) be used to pay off the mortgage, supplement retirement savings, and help pay college tuition.
• Estate Planning:  The proceeds of a life policy can be structured to pay estate taxes so that your heirs will not have to liquidate other assets.

How much life insurance do I need?

To decide how much life insurance to buy, you need to first figure out what your goals are in purchasing this coverage.  As yourself the following:

• Do I want to spare my loved ones funeral costs and outstanding debts?
• Am I concerned that my spouse will not be able to continue to pay off the mortgage?
• Am I concerned about college savings for my children or retirement savings for my spouse?

While all situations are different, you will have to purchase enough insurance to provide for their future, while considering how much of your budget should be devoted to life insurance.

Some experts suggest that you purchase 5-8 times your current income.  (However), you will also need to figure how much your dependents will need to pay for in terms of the cost of owning a home, college tuition, food, clothing, child care, nursing home, funeral expenses, and estate taxes.

Your insurance needs will vary greatly according to your financial assets and liabilities, income potential and level of expenses.

Call your local Absolute Insurance Agent to help you determine what is right for your life insurance needs.