Schedule Jewelry, Art, Collections, etc.

One of the most fequent discussions we have with homeowners is the question of whether or not they should add a special schedule of insurance for their jewelry. Here's why you might want to consider scheduling special coverage for jewelry, art, collections, etc.

1. Most policies limit the amount of insurance for theft of jewelry. If your jewelry burns, no problem because the policy will be there for you. But if it is stolen, some policies limit theft of jewelry to just $1,500 per item up to a maximum of $3,000 for all jewelry that is stolen. Scheduling jewelry voids/overcomes this limit.

2. No deductible for covered losses.

3. Establishes a set value for the payment of the piece's replacement.

4. Expands the kinds of losses covered. If you just can't find your jewelry or if it drops down the sink, or if your expensive vase breaks, normal policies will not cover that. But if you schedule your jewelry or art, those kinds of losses would be covered.

Personally, I think items 1 and 4 are the best reasons to schedule certain pieces of property, especially when they are expensive. We've helped clients schedule computers, bikes, wine, art, jewelry, baseball cards, guns, cameras, and a bunch of other things.

Not only are a lot of these expensive, but many of the things that our clients schedule are very important to them emotionally. Insurance can't prevent the loss, but sometimes knowing that an important piece can be replaced is quite a comfort!

Microinsurance. Problems Like Ours

I have been interested in microfinance since attending a presentation by Unitus (unitus.com) a few years ago. Even with all of the recent problems in our first-world economic markets, think of the few billion people who have no financial market infrastructure at all. No way to bank, no way to borrow, no way to manage risk, etc.

Anyway, microinsurance is one part of the microfinance movement and smart folks are trying to figure out how to get things like crop insurance and basic health insurance to the poorest regions of our planet. Imagine your family's entire income coming from growing rice and it being wiped out by a monsoon. Get the picture?

It turns out that microinsurance has a hard time selling itself: Insurance has proved its worth for centuries, but people still resist it. They don't like thinking about the possibility of bad things happening. That's why car insurance is mandatory--and health insurance may soon be. If supposedly financially sophisticated Americans have to be coerced to buy insurance, should we really expect people in less rich countries to be any different?

Other theories in this Time article are examined, but I found that explanation above to hit home. I'd prefer to see consumers feel there is value is the less-to-worry-about, and it looks like I've got an entire planet to convince. Better get to it!

http://www.time.com/time/magazine/article/0,9171,1921590,00.html

When Vacant Doesn't Mean "Vacant"

Here's the scenario: Let's say that you bought a piece of land near Lake Chelan with the idea that you'll build a vacation home there someday. Except for a flag pole, there is nothing on the property but grass and trees.

Here's the insurance-policy background: If you look at your home insurance policy you'll see that you probably have automatic liability coverage for "vacant land". If you don't want to look it up yourself, you can just trust me when I say that it's there.

Here's the question: Given the scenario and the insurance background listed above, do you believe that your home insurance policy will automatically cover your vacant land for liability?

Here's the answer: No coverage! Believe it or not there are policies and supporting case law that takes away automatic coverage for any piece of land that has any man-made object on it. And given the examples in multiple court cases, any really does mean any no matter how insignificant.

Here's the solution: So if vacant doesn't always mean "vacant" with respect to you having liability insurance, be safe and just add all properties to your policy so you never have to worry about that. We can usually do this for you for about $2 a month!

So enjoy the new property and the dream house planning without the worry.

Funny Insurance Claim Quotes

Q: Could either driver have done anything to avoid the accident?
A: Travelled by bus?

A customer collided with a cow. The questions and answers on the claim form were:
Q - What warning was given by you?
A - Horn
Q - What warning was given by the other party?
A - Moo

"An invisible car came out of nowhere, struck my car and vanished."

"I had been learning to drive with power steering. I turned the wheel to what I thought was enough and found myself in a different direction going the opposite way."

"No one was to blame for the accident but it would never have happened if the other driver had been alert."

Committed, But Not Married

Domestic partners who share ownership of cars, homes, boats, etc. have the same access to a combined insurance portfolio as married partners. And in many insurance-contract provisions there is no difference between the kind of coverage afforded non-married partners as married partners.

But there is that occassional coverage gap that needs to be addressed and unfortunately, it can have a big financial impact if not handled properly. Fortunately, I don't need to bore you with insurance-speak to tell you how you can fix that gap in coverage for non-married partners, and instead you have to do only one thing and it'll cost you nothing.

Here it is:
If you are in a committed, non-married relationship where you share ownership, financial interest, and responsibility for real and tangible assets, be sure that both of you are specifically named on the policy as a Named Insured. That's it!

You can tell if you are both Named Insureds by looking at how your insurance company addresses your policies. Are both of your names listed on the Declarations Page? Are both of your names listed on envelopes and bills? Better yet, just ask your agent.

Something as simple as making sure you are both listed as Named Insureds is an absolutely critical yet amazingly simple thing to do in order to have confidence in the quality of your insurance program.

Free bonus tip: married couples should both be listed as Named Insured, too!

Rental Car Damage Waivers

My brother-in-law and his family are visiting us from Alaska and have rented a car for a couple of weeks. He asked me if I thought he should buy the rental company's Collision Damage Waiver (CDW).

His insurance policy would cover him for any car he drives in the U.S. or Canada, including the one he rented for this vacation. So I told him that he doesn't need to buy the CDW to replace any "lost" insurance from his own policy.

But I did recommend that he buy the CDW because of what the rental contracts typically commit renters to in the case of an accident. If you get out your magnifying glass and hold the rental agreement up to the light you'll see that in many cases they will hold you accountable for certain expenses and costs NOT covered by your insurance. Things like lost rental revenue, diminished value, etc. These are typically not covered by personal auto policies, but are things that rental car companies will expect you to pay for.

So my recommendation that he buy the CDW is not because of any deficiency of his auto insurance, but because of the financial commitment he's made to the rental car company for things that his insurance will not pay for.

Remodeling? Read This!

I was visiting a client's home to talk to them about their new boat and I noticed that their kitchen had been torn to bits. It turns out they had begun a major remodel of their home's main floor.

Most insurance policies have a provision in the policy that makes some coverage for your home conditional on alerting the underwriter of any action that may increase the expected reconstruction cost of your home. The insurance company wants a chance to make sure that they are adequately preparing for the cost and risk of rebuilding your home, so they want to be kept up to date on things that impact the expected reconstruction cost.

So if you plan on doing a remodel, tell us before you begin. We want to explain to you if/why your policy has the condition we mention above and then address this for you with your insurance company. We'd rather have you worried about choosing the best faucet than about missing out on important insurance coverage!

Kids At College & The Auto Policy

Somewhere among the top 5 questions we're asked is "Now that our daughter is away at college can we remove her from our auto policy?". Our typical answer is "no".

Whether or not your child is taking a car with them to college, they still may be a passenger, a bike rider, or a pedestrian and auto insurance policies actually provide the primary coverage for some of the kinds of accidents those activities sometimes bring.

And just as important, in many jurisdictions the courts have held parents responsible for college-attending children based on a variety of legal tests and standards. So if for some reason a college-attending child causes an accident, you might still be on the hook for the fallout of any negligence. So having the auto insurance to help pay for that is kind of imporant.

But as always, tell us what's going on and we'll talk to you about a solution that fits your unique circumstance. You worry about enough things with kids going off to college, don't let insuring them be another!

Your Most Important Asset Is...

At a seminar I was helping to give I was asked, "What is the most valuable asset to protect?". My answer was easy - your ability to earn an income.

There is no more important element of your current financial security and future financial success than being able to earn an income through work. I find that most families plan very well for things like car repairs and leaking faucets, but do not plan well for risks to their job and earning an income. Fortunately, there are many solutions out there to help manage these risks and they don't all involve buying insurance! No one plan fits all people.

Worry over job security has increased substantially over the last couple of years, and for good reason. But remember, the only difference between a worry and a plan is action.

Sorta Calling Out Other Insurance Agents

I asked one of our customers why she liked her financial planner so much and she said "because they are helping us reach our goals and realize our dreams." Exactly!

I think that most people in the insurance industry completely miss an amazing opportunity to be part of something cool in the lives of their customers. It is a shame that most agents and companies do nothing but apply standard templates of coverage, premiums, and service to everyone who walks in the door. And this is especially apparent with internet and call-center sales and service units. Boring, cold, frustrating, and wasteful.

But we don't want any part of that! We want you to feel like we're giving you less to worry about because we want you to focus on realizing your dreams. We want you to not have to think about losses, claims, insurance, or premiums.

That is why a) we are independent and offer insurance solutions from many different companies, b) why we are constantly going to school so we can be smart in our advice, and c) why we share our knowledge by creating custom solutions unique to every customer.

So when anyone asks you why you like Mechelsen, Inc. we want to have earned your answer to be "because they've helped me worry less and live happier".

Turn Off The Water When You Leave!

When you leave your home for vacation think about turning off the water to your home. One of our customers was already bummed to be coming home from vacation, but was even more bummed to come back to a squishy floor caused by a broken washing machine water hose. Those hoses seem to know when it is the worst time to break, so turning off the water before you go gives you one less thing to worry about while you enjoy your vacation.

Designing A Portfolio To Reduce Insurance Premiums

I just finished an insurance review for a family who was looking for ways to save on their insurance premium. After spending some time with them on the phone and visiting their home it was pretty clear to me that they were better off not switching insurance companies and I recommended that they stay with their same agent and their same insurance company for now.

But I did see ways in which they could improve the quality of their insurance and reduce their premium at the same time. So I recommended they go back to their current agent and have the following things done:

1. Raise the home insurance policy deductible. This family carried only a $500 deductible and they'd save about $150/yr just by increasing the deductible to $1,000.

2. Increase the home insurance liability limit from $100,000 to $500,000. This would cost them about $25/yr.

3. Reduce their coverage for "Other Structures" because they didn't have any on their property. This would save them about $100/yr.

4. Increase their auto insurance liability limit from $250,000 to $500,000. This was going to increase premium by about $250/yr.

5. Increase their auto insurance deductibles from $100 to $1,000. This was going to save them about $375/yr.

In the end, they'll have much better coverage for the more important things, and they'll save $350/yr by getting rid of insurance on the things they either don't need or could cover themselves!

It is important that not everyone consider this a recipe for their own insurance coverage because every family is different and not one plan can fit all people. We only recommended this to this particular family because we worked to understand their situation and help them customize their own insurance portfolio to match.

So while we don't have this family as a client of ours (yet), we feel that their insurance is better, they can worry less, and they'll now have $350 that they can put to better, and happier, use!