7 Biggest Mistakes people make
Published on Nov 25, 2015
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PRESENTATION OUTLINE
Mistake #1
Not Purchasing the right amount of Insurance
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Don't underinsure.
Make sure you don't confuse market value with cost of rebuilding.
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TIP:
Contact a general contractor and find out the cost to rebuild your home.
Add cost of preparation.
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Mistake #2
Choosing the Wrong Insurer.
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Before buying a policy, check out the insurer with your state insurance department.
In Texas you can go to https://apps.tdi.state.tx.us/pcci/pcci_search.jsp
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Companies are rated on criteria such as stability and complaints.
Common rankings
are A to D
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Mistake #3
Hasty Comparisons.
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Ever heard anything like:
"15 minutes can save you 15% on insurance"?
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Are you going to really care how long it took to buy the insurance, when you suffer a loss?
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TIP:
Make sure you understand your coverage's.
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Mistake #4
Not understanding the gaps in Home Insurance Coverage.
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Two major catagories:
Replacement Cost
Actual Cash Value
Most policies provide protection for fire, smoke, rain, lightning, wind, hail, snow, ice sleet, vandalism, theft, explosions, vehicles, and malfunction of utilities.
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Optional coverage's often include coverage for broken pipes, sewer backup, and foundation water coverage.
As a general rule, home insurance does not cover damage from flood or earthquakes.
Along the Texas coast, many policies do not cover for hurricane damage.
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Many companies in Texas have a minimum deductible for wind and hail coverage of 1%.
Others have a minimum of 2%
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You can often get a lower deductible for other coverage's such as for fire and theft.
TIP:
Keep your deductibles as high as you can afford, but no more.
Pay for losses around deductible amount, without filing a claim.
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Mistake #6
Insuring Valuables With Your Home Policy.
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Insuring valuables through your home insurance policy can be more costly and cause your entire policy to increase due to a claim.
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TIP:
Insure items such as jewelry through companies set up for that purpose, such as jewelers mutual.
Yes. Taking an inventory can be time consuming but you will be very thankful you did this when you have a claim.
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Important to include date purchased, make, model, purchase price. Don't forget to identify high value clothes, shoes and hand bags.
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Video works great because you can record by voice the details on what you are filming. Photos and hand written documentation is also good.
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As of the date I am preparing this, my sources tell me there are only 3 states that do not allow insurance companies to use credit scoring to determine their rates.
It is allowed in Texas.
Studies found that people with better credit scores file less claims:
University of Texas Insurance Credit Scoring Research:
http://repositories.lib.utexas.edu/bitstream/handle/2152/15187/tbr-2003.02....
Federal Trade Commission: (July 2007)
http://www.ftc.gov/sites/default/files/documents/reports/credit-based-insur...
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Conclusion of Federal Trade Commission
“(Credit) scores effectively predict the number of claims consumers file and the total cost of those claims. Their use is likely to make the price of insurance better match the risk of loss that consumers pose. Thus, on average, as a result of the use of scores, higher-risk consumers pay higher premiums and lower-risk consumers pay lower premiums.”
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Almost all insurers use credit scoring in the states that allow it.
Your credit score can greatly effect your insurance rates.
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Only companies in Texas who do no require credit scoring for home insurance as of the time this is prepared:
Consolidated Lloyds
Texas Fair Plan
Texas Windstorm Association
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This is why independent agents such as myself are required to get some of your personal information, including your social security number in order to provide you a quote.
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According to Experian
"An inquiry will be added to your credit report each time an insurance company accesses your credit report. But, the inquiries will have no effect on credit scores or lending decisions."
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A great place to find out more about credit scoring:
Texas Department of Insurance.
http://www.tdi.texas.gov/credit/
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