As life circumstances change, it is important to review insurance coverage. There are several issues every policyholder should consider when doing this.
Married drivers typically qualify for auto insurance discounts. If couples have two cars, it is usually best to insure them on the same policy. With home insurance, it is important to update coverage, and be sure to consider any new valuables for coverage increases. Life insurance is also an important topic after marriage. Both working and non-working spouses should have life coverage, and this is especially true with couples who have or plan to have children. The death of a working spouse means a loss of income, and the death of a spouse who stays home to care for children means the loss of a care provider and the need to pay for childcare expenses.
People who have children or add more to their family must consider life insurance. It is important to keep the amount updated for future beneficiaries. Also, it is important to consider disability insurance increases with every child added to a family. In the event of the main earner becoming disabled, there will still be adequate income. This is not true if people plan to rely solely on government disability benefits. When children become teens, it is cheaper for parents to add them to their auto policies than to let the teens buy their own coverage. Parents may also qualify for a discount when the teens are away to college or not around to drive for a certain period of time.
People who have disability and life insurance through a former employer can replace that coverage with individual policies. For people who receive an income increase or take on additional financial commitments, it important to review and adjust coverage as needed. In the event of an income decrease, some people wish to cut their premiums. A good choice for this is term life insurance.
Major home improvements call for additional or adjusted insurance coverage. It is important to avoid being under-insured. Be sure to count new structures on the property. Whether it is adding a shed or improving a garage, be sure to report it to the insurance company and make adjustments accordingly. Large purchases such as furniture may also need additional coverage. People who plan to buy a second home should research insurance costs for that home before making a purchase, and flood insurance is a smart choice for homes near water or in flood-prone areas.
After purchasing valuables such as fine art, antiques, jewelry, firearms and expensive electronics, it is important to have them properly insured. Standard home insurance policies only offer limited coverage for these items, so it is wise to obtain a separate policy or endorsement for them. All items must be appraised with receipts before doing this.
People who rent are not protected by the property owner's insurance for the building. While the building itself is covered, the belongings of the renters are not. Purchasing renters' insurance is a smart idea. Renters can choose from insuring their items for actual cash value or replacement costs. Discuss these options with an agent to determine which is best.
Regardless of where you live in the US, there is a constant threat of termites or wood-boring beetles infiltrating your home. Termites account for about $1 billion a year in damage to American homes and now that an invasive species from Asia has made it to North American shores, the threat is larger than ever. A typical termite colony can eat through 2.3 linear feet of 2x4 pine in a single year. It may not seem like much, but they will often spread to more woodwork and if they start munching on a supporting beam, the entire house structure is at risk.
To make sure that your home keeps these hungry critters at bay, you need to protect it from making it a tempting smorgasbord for termites. You would be well advised to heed the following tips:
Keep your yard clear of scrap lumber - Never bury scrap wood or waste lumber in your yard, and avoid keeping piles of wood in your yard as it will attract termites. Store this wood and any firewood away from the house and make sure that there is a barrier between the wood and the ground.
Get rid of decaying vegetation - On a regular basis, clear fallen branches or decaying plants near the side of your house.
Keep mulch piles far from the home - If you do have a pile of mulch for your gardening, make sure that you place it in a corner of your yard far away from your home. And when you do use mulch, don't spread it alongside your house if you have vegetation that abuts against the home's exterior.
Use treated lumber - Use treated lumber for any wooden structures that will have direct contact with the ground. The chemicals used to treat this wood are not 100% foolproof, but they can deter termites nonetheless. They can act as a deterrent when used in wooden decks and patios.
Avoid wood contact with ground - It's best if you make sure that no wooden structures actually touch soil, especially if you have a deck attached to your home. Use concrete supports that raise the wooden support beams for decks and patios off the ground.
Fix water leaks - Termites need water too, so fix any water leaks in and around your home.
Hire a pest control operator - Contract with a pest control service that will come to your house four times a year to spray for insects.
Maintain your home - Routinely inspect the foundation of your home for signs of mud tubes (used by termites to reach a food source), uneven or bubbling paint and wood that sounds hollow when tapped. Fix leaky gutters, ensure that your attic is well ventilated, and seal cracks or holes in Regardless of where you live in the US, there is a constant threat of termites or wood-boring beetles infiltrating your home.
Do's and Don'ts When Filing a Claim
If your home or property has been affected by wildfires, you're likely planning to file an insurance claim. Here are some tips to help you maximize your compensation and get your settlement in a timely manner.
1. Safety first. Don't re-enter your fire-damaged home without first checking with fire officials. They will schedule an initial walk-through with you. Before you go in to your fire-damaged home, read this Red Cross guide:
2. Prevent further damage. You have a duty to prevent unnecessary damage to your property, so:
3. Gather information. Document your claims, as much as possible. To begin with, your initial claim request will require the following information:
4. Call us or your carrier. Don't delay filing your claim. The sooner you file for reimbursement, the sooner you will receive it.
5. Take notes. Write down the claim number, and keep careful notes of every conversation, including whom you spoke with by name.
6. Throw nothing away. Don't discard anything until it's been inspected by an appraiser.
7. Claim smoke and water damages. Just because property was not directly damaged by flame doesn't mean it's not covered under your property insurance policy. You may have to throw away furniture, drapes and carpeting, replace flooring, drywall and wallpaper, and undergo expensive mold remediation. Account for all fire damage.
8. Assess the value of any lost trees or shrubs. These are also generally covered by homeowner's insurance policies.
9. Don't forget outbuildings. Include damaged or destroyed sheds, storage buildings, detached garages - as well as their contents - and even septic tanks and systems in your claim.
10. Check your car. If you have comprehensive coverage on your car, your auto insurance carrier should reimburse you for the fair market value of a totaled vehicle, or pay for damages (subtracting your deductible.)
11. Get an advance payment. Most insurers will advance you a substantial amount even while your final claim is still being processed. This allows you to start repairs right away to prevent further damage to your home, and may help you pay unexpected expenses such as emergency lodging.
12. Track your expenses. Keep receipts of any additional expenses you may incur as a result of being forced to evacuate your home. Most policies provide coverage for additional out-of-pocket expenses as a result of a fire or other covered peril. Examples of such temporary expenses include:
13. Have the carrier pay you, directly. Some contractors will offer to do repairs for no money up front as long as you sign a contract authorizing them to bill your insurer directly. The practice may seem convenient, but usually doesn't benefit the consumer.
14. Consider effects on home-based business. Your business insurance may help you with lost inventory, equipment and lost income from business interruption.
If you are accumulating wealth quickly and live the comfortable life with a large house, luxury car and other expensive assets, you've no doubt already insured all of those belongings. But while most high-net-worth individuals have their possessions properly covered, they often overlook their largest risk: liability. In fact, they often over-insure against minor threats and underinsure for major ones. Many people will carry low minimums on their auto and homeowner's policies, which leaves them exposed to any liability lawsuits that may surface. If the maximum payout on your homeowner's or car insurance is less than the attachment point of your umbrella policy, you could be left having to cover the gap between the two. Look at it this way: If you wreck your Porsche it won't imperil you financially. But if you also maim or kill someone in the process of wrecking the car, your wealth could be put in jeopardy without the proper protection.
That's why it's of the utmost importance that you carry the proper liability coverage limits on your auto and homeowner's policies, so that you don't have a gap that can leave your personal assets and funds exposed.
Further, if you are a public figure or sit on any boards of directors or do charity work, you may want to consider increasing your limits and supplementing your coverage with an umbrella insurance policy to insure against any lawsuits stemming from decisions you may make in those capacities.
Scenarios and repercussions
You're involved in a car accident that leaves the occupant of the other car in serious condition, and she will need extensive operations and likely years of physical therapy.
You've insured your car with a liability limit of $300,000 and you have an umbrella policy with a $1 million limit. That umbrella limit is not nearly enough to cover the bills for this injured individual, whose care costs will likely surpass $3 million easily in the next four years. That would leave you $2 million out of pocket.
You sit on the board of a local non-profit and volunteer your time on the board without remuneration.
A former vendor sues the entire board for breach of contract after the board had voted to terminate their contract. The matter is brought to trial and a judge orders that all board members personally pay $100,000 each for their actions. If you don't have a personal umbrella policy, you'd be on the hook and out of pocket for the entire amount.
You have a Super Bowl party at your house and about 20 guests, one of whom slips on some spilled wine on your deck and throws out his back and can't work for three months. He sues you for negligence and the homeowner's insurer negotiates a settlement of $250,000. Your policy has a $100,000 liability limit, but your umbrella policy doesn't kick in until $300,000. That leaves you paying $150,000 out of pocket.
Unfortunately, if you have money, you might as well be walking around with a target on your back. In our litigious society one misstep or mistake can result in an expensive lawsuit and, if it goes to trial, the costs escalate tremendously and your fate rests in the hands of a jury or judge. Talk to us about a policy that would be right for you. Excess liability policies for high net-worth individuals will often include the costs of unlimited legal defense and legal counsel.
In 2017, the U.S. experienced one of the most disaster-filled years in history, with tens of thousands of people losing their homes and countless others temporarily displaced. The insurance industry is expecting the trend to continue, based on climate forecasts and the history of natural disasters and their costs over the past 10 years. The 2017 hurricane season was the costliest in the history of the U.S., resulting in countless windstorm and flood-damage claims from homeowners and businesses in affected parts of the country.
The number and size of tornadoes has also been on the upswing. The tornado season in 2017 started exceptionally early, having the second most-active January since records began in 1950, and one of the most active first quarters in recorded history. Then there were the wildfires that swept through large swaths of both Northern and Southern California, which made 2017 the costliest wildfire year in the state.
Despite this, a new survey by Clearsurance found that while nearly 90% of homeowners expressed heightened concern over potential damage to their homes from natural disasters, only 58% had taken steps to review their coverage to see if it was adequate. While you may think that your homeowner's policy will coverer you if a natural disaster strikes, you may not in fact be covered. If you live in or nearby an area that's been affected by a natural disaster in the last 10 years, you should talk to us about reviewing your coverage and risk picture.
Typically, standard homeowner's policies help protect against specific perils, or certain causes of loss, such as theft and fire, but coverage may vary by geographic location and by policy.
You may also find that some insurers do not sell homeowner's policies in areas where wildfires are common. However, you should check your policy limits and what it covers. If you bought the policy years ago and haven't revisited its details, you may want to schedule time to review it with us.
If you are worried about damage and claims arising from tornadoes and spring storm conditions like hail, rain or windstorms, most standard home and car insurance has basic provisions for tornadoes (which are windstorms) and various weather-related types of risks.
But the type of coverage you have can make a difference of thousands of dollars in how much you get paid in a claim. The biggest risk you may face if your home suffers major damage during a severe storm or tornado is being underinsured.
The 2017 hurricane season was the costliest in the history of the U.S., resulting in countless windstorm and flood-damage claims from homeowners and businesses in affected parts of the country.
To limit their exposure to catastrophic losses from natural disasters, insurers in these states sell homeowner's insurance policies with percentage deductibles for storm damage. These are instead of the traditional dollar deductibles that are used for other types of losses, such as fire damage and theft.
With a policy that has a $500 standard deductible, for example, the policyholder must pay the first $500 of the claim out of pocket. But percentage deductibles are based on the home's insured value. If a house is insured for $300,000 and has a 5% deductible, the first $15,000 of a claim must be paid out of the policyholder's pocket. The details of hurricane deductibles are spelled out on the policy declarations page.
While many people had windstorm coverage for their homes, about 70% of the flood damage caused by Hurricane Harvey was uninsured, according to CoreLogic, an aggregator of disaster risk data.
Most states have some flood risk-prone areas and if you live in a designated floodplain, your mortgage lender will require that you carry flood insurance. Mostly, the main insurer for flood insurers is the National Flood Insurance Protection Program, although in some regions, a select few private insurers are in the market. But, just because you don't live in a floodplain doesn't mean you are 100% safe from flooding. You are at risk if you live near a river, regardless of the levee or weir protection system in place in your community, as weather and rainstorms are getting more unpredictable. Flood insurance protects two types of property: the structure of your home and the contents. Whenever you purchase a flood insurance policy, it takes 30 days for it to take effect. So, if you fear that your home will be inundated, be aware that you can't benefit from coverage purchased say just a week before such an event.
You've no doubt been overwhelmed by the amount of fine print that your insurance policy has.
The main reason for the fine print is to lay out in detail what the insurance company will cover in case of a claim and what it won't. It's important that you go through this with your insurance agent and that you especially understand the section called "Exclusions."
Exclusions are provisions in a policy describing losses that the policy will not cover. For example, a homeowner's policy does not cover losses caused by the use of cars, and a business auto policy does not cover injuries caused by a bulldozer on a construction site. While it may appear that the insurer includes these provisions to get out of paying claims, the reasons are more complex and less insidious than that. There are very sensible reasons why no insurance policy covers everything. First, not every person or business has the same exposures to loss. For example, you likely don't own a tractor as a homeowner and the owner of a tractor, in turn a company with 15 employees may work out of a building it occupies but does not own. Because there are so many contingencies, insurers try to create insurance policies that cover the average scenario for each policy. And they learn over time what they should cover and what they should not.
Getting specialty coverage
Standard insurance policies contain coverage that apply to large groups of households and businesses, but they do not cover every possibility. Policyholders with additional needs usually can purchase additional coverage in the form or a rider or endorsement. For example, homeowner's policies do not cover damage caused by water backing up from an overflowing sump or drain, but households that have basements with sumps or drains have the option of buying this coverage. If you don't have a basement or a sump pump, you obviously don't' need this coverage and it won't be forced on you in a typical homeowner's policy.
Every coverage comes with an associated cost and the insurance company must factor in the costs of potential claims, expenses and profit for that coverage.
The more coverage a policy provides, the higher the premium. Without exclusions, people and businesses would be forced to pay for coverages they do not need. Exclusions help keep the premium affordable.
Also, some losses are just not insurable. That's because insurers cannot predict when certain types of losses will happen and how much they will cost. One typical exclusion is for acts of war or terrorism. Armed conflict with another country or full-scaled terrorist attack could cause huge losses beyond the abilities of insurance companies to pay. Because every household or business's circumstances are different, standard policies might not provide all the coverage necessary. For example if you live in a flood-plain, you should also purchase flood insurance along with your homeowner's coverage. And if you have specific liabilities or assets that may not be covered, you would likely need to talk to us about a policy endorsement.
If you think you may have specific insurance needs like this, don't hesitate to give us a call.
If you've been insuring your vacation rental with a standard homeowner's policy, it likely won't be enough to cover the various types of damage that are inherent when renting out property, like a guest accidentally breaking that $3,000 65-inch flat screen while playing catch in the living room. And it also won't cover any injuries that your guests sustain on your property, or lost income should it be rendered un-rentable for a period.
The answer is vacation rental property insurance, which you can think of like a homeowner's policy with some added protection for contents and liability. Even if you have a solid contract that requires guests to pay for damage to your rental and require a deposit, if someone doesn't have the money to pay for damage, you can try to sue but collection will be a long way off. In other words, if you don't have vacation rental insurance, you're on the hook.
What you need to know
A standard homeowner's insurance policy will not provide coverage for business activities. Also, policy language will vary from insurance company to insurance company and from state to state. So, it's wise to give us a call about your options. Usually, there are two alternatives:
The three main areas you'll want to insure are:
Liability - The biggest liability you'll face with a vacation rental is injury to your guests or damage to their property due to your alleged "negligence." Insurance would provide coverage for any injuries sustained by guests on your property that they blame you for, and for costs if they file suit against you.
Building and contents - If one of your guests starts a kitchen fire that burns half the property down, this part of a policy will cover rebuilding of the structure and replacement and installation costs of contents damaged or destroyed.
Rental income - If your property is damaged and rendered un-rentable for a period, a proper policy can also reimburse you for lost income during that time.
Before securing a policy
Before you decide on a policy, you should take stock of your rental:
If you also stay in your rental
If you insure your short-term rental as a business, you can also stay there since there are no standard occupancy restrictions on a business policy. This means the property is insured while you, your friends or family, and of course paying guests stay there. If the short-term rental is also your primary residence, you can still purchase a vacation rental policy. In that case, the policy simply adds $1,000,000 in personal liability and $50,000 in loss of use to relocate in the event the property is being rebuilt. This is very important if you don't carry a homeowner's policy elsewhere.
Most prudent individuals with a family have life insurance in place, but what happens if you have a life-debilitating illness or injury that leaves you incapable of working and which renders you struggling to hang on to life? The financial consequences of a terminal illness can be catastrophic. Developing cancer, suffering a heart attack or being seriously injured in an accident can leave you and your loved ones scrambling to make ends meet. For people in that position, it makes sense for life insurance benefits to kick in so that they can be used while the covered individual is still alive.
The term for this type of insurance is "living benefits," which typically comes in the form of a rider to a life insurance policy. A living benefits rider helps people to receive care and pay for chronic or terminal illness that precedes death. The rider entitles the policyholder to an early and accelerated payout of policy death benefits, if the insured is diagnosed to have a life expectancy of 12 months or less. The rider can help make the insured's remaining time as comfortable and as dignified as possible, and also keep the family from financial ruin.
Often the majority of our health care expenses come during our end-of-life stage. And that leaves many terminally ill patients facing financial hardship during the worst possible time. Unfortunately, a simple life insurance policy will not step in to pay benefits until the insured has passed. The living benefits rider breaks down that barrier. The policyholder can access up to $250,000 or more of eligible policy proceeds, depending on the type of contract. This payment, made to the policyholder rather than the beneficiary, reduces the cash value and death benefit, so it dilutes what the policyholder's beneficiaries will receive upon his or her death. Policyholders without this rider and in this situation have two options for accessing funds:
• A policy loan
• A policy surrender
In most cases, however, the rider may provide more funds than either of these options. This is because policy loans or surrenders are usually based on cash value, while the amount available from the living benefits rider is generally based on the policy's face value, paid-up additions, and (if applicable) an amount payable under a rider that provides a level amount of insurance. The rider may be exercised only once and it will be terminated once the policyholder makes a claim for accelerated benefits. At the policyholder's request, this rider can be added to new or existing policies for a one-time charge, which is applied when the rider is exercised. The policy owner merely has to elect living benefits coverage, and can choose to do so anytime. Benefits are tapped when the policyholder presents the insurance company with proof that they have a terminal illness or have been given a certain time to live based on their circumstances.
If you have any questions about this voluntary benefit and why you should consider offering it to your employees, contact us today.
At the end of 2017, President Trump signed into law the Tax Cuts and Jobs Act. The good news for most Americans was an overall reduction in marginal tax rates, together with a substantial increase in the standard deduction. Specifically, the new law increased the standard deduction for single taxpayers from $6,350 to $12,000, and for married couples from $12,700 to $24,000. However, it also restricted taxpayers' ability to deduct home mortgage interest, moving expenses, state and local taxes and certain other related costs. Here are some of the most significant changes and how they may affect you.
Home mortgage interest deduction
The old law: You were allowed to deduct the interest on mortgage debt of up to $1 million. You could take advantage of this cap on up to two homes - your primary residence and your second home. (The cap on principal that qualified for the deduction was $500,000 for married couples filing separately, but an unmarried individual could still deduct the interest on up to $1 million per property.)
The new law: For all homes bought on Dec. 15, 2017 or later, you can only deduct the interest on up to $750,000 of mortgage debt. If you are married and filing separately, the cap is $375,000 per spouse.
The cut-off: The more favorable tax treatment under the old law applies to all mortgages dated prior to Dec. 15, 2017. If the mortgage is dated Dec. 15 or later, the new tax law applies.
Finally, if you refinance a mortgage that was dated prior to Dec. 15, 2017, you will still get the benefit of deducting the interest on up to $1 million in principal.
Home equity loan interest
The old law: Prior tax law allowed you to deduct interest on up to $100,000 in home equity loans. For married individuals filing separately, the cap was $50,000.
The new law: Home equity loan interest is no longer tax deductible in any amount.
Limitations on state, local and property tax deductions
The Tax Cuts and Jobs Act restricts individuals' ability to deduct property taxes and other state and local taxes against their incomes.
The old law: For 2017 and prior, you could deduct an unlimited number of state and local taxes from your federal taxable income - subject to some limitations under alternative minimum tax rules.
The new law: You can only deduct up to $10,000 in total in state and local income taxes. This provision will have the most effect on those in states with high state and local taxes, as well as those who have expensive properties that generate significant property taxes. For those who are married and filing separately, the deduction is capped at $5,000.
The old law: Until 2017, you could deduct certain relocation costs if you moved for a new job located more than 50 miles away. There were a series of complicated "time and distance" rules that governed the deductibility of moving expenses.
The new law: Only active-duty military personnel and their families may deduct moving expenses.
Life insurance is a straightforward concept: Buy a policy and pay a relatively small premium, and the beneficiary will get a large cash benefit if the insured dies while the policy is in force. But there are many variations on this basic theme - and just as many misconceptions about how life insurance works. Here are some of the most common myths.
I already have enough life insurance through my job.
Many people believe they have coverage from work. But in many cases, the amount of coverage from a workplace group policy is not nearly enough to provide meaningful protection for the employee's family.
The reason: Section 7702 of the tax code, which governs employer-paid group life insurance benefits, only allows employers to deduct premiums for a death benefit of $50,000 or less. That's only a fraction of the true need for most working families.
Many financial experts recommend owning between 10 and 12 times one's salary or more - especially if you are relatively young. The reason: If the unthinkable happens, the family will need that life insurance to replace many years of a breadwinner's salary. Furthermore, if you get sick and lose your job, you may lose your life insurance just when you need it most. And you may not be able to qualify for life insurance then.
Owning your own policy ensures that you can select the amount of protection that suits your needs, and that your policy follows you even if you change jobs or leave the workforce. If you have coverage at work, you may want to explore owning additional coverage for yourself and your family.
I'm young and healthy and don't need it.
The best time to buy life insurance is when you are young and in good health. Accidents and injury, not illness, are the leading cause of death for Americans under age 44, and the fourth leading cause of death for Americans of all ages, according to the Centers for Disease Control.
These deaths include:
Any of these events can strike the young and healthy at any time. More than 235,000 Americans died of injuries and accidents in 2016, according to the CDC - 105,296 of them, or 43%, were age 45 or younger.
I don't qualify for life insurance.
Medicine has improved a great deal in recent years - and life insurance underwriting has changed with it. You may still be able to qualify even if you have controllable diabetes, cancer (in remission, usually for five years or more), or if you smoke or are overweight, have high blood pressure or cholesterol.
Yes, you'll likely have to pay a higher premium, or settle for a lower amount of life insurance.
I can't afford it.
It's more affordable than you think. Some 80% of Americans vastly overestimate the cost of life insurance, according to LIMRA. Millennials overestimate the cost by 213%, and Gen Xers by 119% . The fact is today's life insurance carriers are able to offer meaningful protection for just a few dollars per week - and often less than the cost of a single dinner out per month. This is especially true if you buy it while you are still relatively young and healthy. Besides, if you think you can't afford it now, imagine how devastated your family would be if they suddenly lost you!
Rod has owned The Hanks Group, a Leading Nationwide Insurance agency since 1999. We help families and business owners protect their most valuable assets with a broad range of insurance products. We believe that finding the right auto, home, life and commercial insurance for our clients Starting out with 1 employee in a small office in East Dallas, The Hanks Group has grown to be one of the largest Nationwide Insurance Agencies in the Dallas Fort Worth Metroplex, with offices in Dallas and Fort Worth. Rod is always available to answer any questions about insurance or business at 214-275-8372