General Insurance Analysis

Reviewing your property casualty insurance program may not be much fun, but years of careful accumulation can be wiped out by a casualty loss. You should periodically review all coverages for adequacy of provisions and amounts of protection.

Evaluate Coverage Limits
A replacement cost appraisal of your home needs to be made by a qualified person. For the purposes of calculating the insured replacement cost, it is suggested that the use of a guideline such as the one prepared by the American Appraisal Associates, Inc.

After appraising your house, the calculations will probably indicate that the 100% replacement cost rider should be included with your present coverage. Inflation steadily increases the value of homes. However, insurance must be based on the cost to replace a home, and this is frequently greater than the market value, especially with older homes. If coverage is less than 80% of the value, claims will not be paid in full but at the ratio of coverage, say 60%.

Contents coverage schedules usually need to be increased regularly. You may need a special articles policy or rider for full protection on items such as jewelry, antiques or collections. Appraisals should be updated periodically with inventory of furniture and personal possessions.

Taking photos or video tape showing the items in hour home is highly recommended. The list and tape or photos should be kept in a safe deposit box or with your insurance agent.

The standard contents coverage is usually 50% of the dwelling coverage. In your present policy, jewelry and silverware are scheduled, but there are limitations against loss by theft on items such as furs and guns. You should review these limits, schedule those items of value, and update the value periodically.

Remember the last article you read about a lawsuit as a result of an accident? The amount was probably well over $100,000. What might be the damages if a loaded truck was overturned? We consider $100,000/300,000/25,000 to be the absolute minimum coverage for automobile insurance. More adequate coverage is $250,000/500,000/100,000. It is inexpensive and recommended that you maintain even higher limits

Consider Increased Deductibles
Increasing deductibles can pay for higher limits of protection since it is not the small claim that really hurts. You should convey all of your circumstances to your agent and get quotes for various amounts and types of coverage. You may wish to consider increasing your deductible which would save you approximately 10 to 15 percent over a period of a year. However, you need to consider what the current tax laws allow as the percentage of your adjusted gross income for casualty losses to be used as an itemized tax deduction.

Liability Coverage
Your “financial visibility” increases your liability exposure. The more successful you become, the more this becomes apparent through automobiles, residence, business and property holdings. Stated simply, “The more you have, the more you’ll be sued for.”

The most important recommendation would be the purchase of a liability umbrella policy that is usually written for a million dollars. This coverage guards against any loss that can wipe out your savings and investments as well as impoverish the family. It would provide liability protection, over and above your present coverage for home, auto, boat or personal activities for an entire family. When purchasing this liability policy, the rates are based on occupation and the existing underlying coverages, but cost would be in the area of $100 to $150 per year.

Your automobile limits of liability would be sufficient if the liability umbrella policy is purchased. Again, the general liability policy would protect you over and above the auto and homeowner policy limits of liability and also covers libel and slander, important exposures frequently not covered.