Is it Time to Take an Insurance Inventory?
Lori Z. Bahnmueller
Michigan Credit Union League -Your Money Matters
As the new year approaches, New Year's resolutions -- like exercise programs, diets and promises to become better organized -- come to mind. This year, however, in addition to your regular list of improvement goals, consider taking an insurance inventory. This particular resolution will take only a few hours and provide you with peace of mind for an entire year.
Gather all of your policies and read them through again; it may have been some time since you went over this information with your insurance representative. Make sure that you fully understand the conditions of the policy and just what it covers and does not. Make a list of questions, grouped by which insurance company they pertain to. That way, you won't forget any questions when you're finished with your inventory. It's a good idea to list each policy you carry and what it currently covers, such as life, automobile, homeowners or renters (don't forget any additional coverage you have purchased such as theft, fire, flood or earthquake insurance). Remember any credit-life coverage that might have come with loans and any specialty coverage you may have on valuables.
Then look closely at what is covered and whether you may have acquired new property that isn't covered. It doesn't take long to exceed the coverage amount that was once fine. For instance, the homeowner's policy you purchased five years ago might not account for the new big screen TV, the new dining room furniture or the tools and yard equipment which now take up most of the space in your garage. This is the perfect time to walk room by room through your home and take a physical inventory of everything you own, listing the purchase price of any new items. This way you can find if additional coverage is necessary.
But don't stop there. You may be carrying coverage you don't need. Are you carrying credit-life insurance that will pay off your loans if your die and also have enough life insurance coverage to do the same? Remember to consider your mortgage separately, as there are programs specifically designed to cover that debt.
Now, call your agent and discuss your current situation. Ask for a quotation on the coverage you'll need. Then shop around. Don't assume that your insurance agency has done all of the comparison shopping for you. Call two or three other companies, and see what they are offering.
When looking for insurance companies, check with any organizations you belong to, (credit union, AARP or place of employment) they sometimes offer group discounts. Evaluate all of the offers and decide which is best for you. For some people, a slightly higher priced premium is worth it for a larger well-known company or one that has great customer service.
A few more tips to keep your costs down:
* Raise your deductible. Raising a $250 deductible to $500 can cut your premiums by 12%. Raising to $1,000 can mean a reduction of 25%.
* Use caution when making claims. Making too many claims too frequently can put you into a high-risk category and cause your carrier to raise your premiums or drop you. Think twice before making a claim, especially if it's just over your deductible.
* Inventory each year and pay special attention to your valuables. Jewelry and artwork can be insured with a rider, which only costs $10 to $20 per $1,000 of appraised value.
* Don't insure your house for its market price--because that amount includes the cost of the land. Insure it for replacement value instead.
* Play it safe. Automatic seatbelts, air bags or other safety mechanisms in an automobile, smoke detectors, fire extinguishers, and dead bolts in a home all may qualify you for discounts.
* Consolidate insurance companies. If you insure your cars and your home with the same agency you could receive up to a 25% discount.
* Make a home video of your property and all of your contents. This will ensure that your claims will be paid. Store the video at someone else's home or in a security box; if your home is damaged chances are that your video will be also.
* Drive safely. The fewer traffic violations and accidents you have, the lower your premium costs.
* Don't buy extended warranties to insure your purchases. If it breaks down, the money you put into the warranty will usually cover more than the cost to replace it.