Have you ever heard the expression: “A car is a bad investment”?  This is generally true because your car begins to depreciate in value as soon as you drive it.

My post of September 4, 2011 discussed the various settlement options commonly found in insurance policies.  Auto insurance policies usually pay physical damage claims to your auto on the Actual Cash Value basis.  This means the depreciated value of your auto is considered when determining its value.

Erie Insurance has a coverage available to brand new cars not previously titled called New Auto Security Coverage.  When this coverage is purchased on your brand new auto and that auto is totalled in a covered loss Erie Insurance will replace your auto with another new auto of the same make, model and equipment.   This means that instead of being paid Actual Cash Value for your auto you are paid Replacement Cost.  This coverage applies to autos that are two years old or less.

Next time you purchase a brand new auto I suggest you add New Auto Security Coverage to your auto insurance policy.  The small premium cost may well be worth it.

Apartment complex in Elizabethtown PA

The basic purpose of renters insurance should be obvious:  it covers the contents of your apartment in case they are stolen, burned up, blown away or vandalized.  Many people don’t realize that most policies cover their contents anywhere in the world. So if your laptop gets stolen during your surfing trip to Bali, it is still insured.

Renters insurance (aka:  Tenant insurance) is broader than most people realize – and your landlord’s insurance more limited.

Many tenants think that their stuff is already covered by their landlord’s insurance policy.  Not so.  The landlord’s insurance typically covers only the landlord’s property.  You are left out in the cold when the apartment building’s gas heater explodes.

Speaking of exploding heaters, if something happens to your residence that renders it temporarily uninhabitable renters insurance will cover hotel expenses and other costs incurred until you can move back in.

Renters insurance also provides you with personal liability insurance.  This includes liability claims that happen away from your apartment.  Many renters own pets and liability coverage is provided even when the friendly family dog might accidentally cause injury to someone. 

Many landlords and property managers also require their tenants to have Renters insurance.  All of this usually comes at a cost of around $150 per year.  If you have auto or life insurance with the same insurance company it may cost even less.

Renters policies generally start at around $25,000 for contents coverage.  But many people find this is not enough.  Additionally, items like expensive jewelry, guns and silverware are limited when the loss is a result of theft.  Floaters can be added to a renters insurance policy to specifically cover these items for higher limits.

You will also have to choose between an actual cash value or replacement cost policy. In the event of a claim actual cash value pays you what the lost possessions are worth (the amount you paid, minus depreciation).  Replacement cost coverage pays enough to replace your stuff.

So to answer the question – Yes, apartment renters do need insurance!  There is a lot to think about when it comes to renters insurance.  Please call to discuss your needs.

There were 4 general questions relating to damaged trees:

1. Is the tree itself covered if damaged by the weight of the snow?  No.  There is limited coverage for trees under your Homeowners insurance policy if damage is caused by a few named perils and guess what?  Wind and weight of snow are not among them.
2. If a tree limb damages my property, do I have coverage?  Yes. Generally all Homeowners insurance policies provide coverage to your house if damaged by a falling object.
3. Is there coverage to clean up fallen limbs and/or trees? That depends.  Homeowners insurance policies pay to remove fallen trees that have damaged covered property.  Erie Insurance has an extra feature that pays up to $500 per tree subject to $1,000 limit to clean up fallen trees even if the tree does not damage property.  However it must be a fallen tree not just a fallen limb! (Yes, in this case there is a difference between fallen tree and fallen limb.)
4. Who pays if my tree causes damage to somone else’s property?  Usually the owner of the damaged property is responsible for his own property.  If an otherwise healthy tree is damaged by wind or in this case snow, why should you, the owner of the tree, be held liable?

Thankfully this storm only caused minor damage for most homeowners.  My advice is to clean up the limbs yourself and only use your Homeowners insurance when really necessary.

Stacked coverage allows you to collect the sum of the Uninsured or Underinsured Motorist limits for each auto on your insurance policy.  For example, your Uninsured Motorist limit is $100,000 per person / $300,000 each occurrence and 2 autos are on the policy.  With stacked coverage there is $200,000 available to each person injured by an uninsured driver subject to maximum payment of $600,000.  The more cars on your policy the more coverage available.

If stacked coverage is rejected your coverage is said to be “Unstacked”.  Your maximum coverage is now the limit shown on the policy regardless of the number of autos on the policy.

Stacking of coverage results in a higher insurance premium.

In the past my recommendation to people with 1 car on their auto insurance policy was to unstack their Uninsured & Underinsured Motorist coverage.  The reason:

1. Save money on the insurance premium.
2. One multiplied by any amount = that number. Meaning there was no increase in your coverage limit.

However, effective November 1, 2011 Erie Insurance is changing their auto insurance policy.  There are now some situations where a policy with only 1 car can benefit from having stacked coverage.

Take a few minutes to call Thome Insurance and speak with any of us about your auto insurance policy and see if Stacked coverage might make more sense for you.

Pennsylvania law requires that homeowners and personal lines policies be given 30 days notice of intent to non-renew insurance coverage and 60 days notice for commercial policies.

I want to assure my clients who have policies with Elizabethtown Insurance Company that my office will be contacting you to discuss replacement insurance coverage.  If you have any questions please call me.

One of the conditions of the Flood Insurance Policy is that a signed proof of loss statement must be submitted within 60 days of the loss.  Because this disaster was so severe FEMA has granted an additional 60 days for the proof of loss statements for PA and NY.  This will allow those with flood damage the extra time needed to substantiate their claim.

On a different note, one of our insureds who lives in Hershey suffered flood damage but did not have flood insurance.  They applied for a US Small Business Administration loan.  One requirement for the loan was to buy flood insurance.  While completing the flood insurance application the insured made an off-handed remark – “I wish I had known that I could have bought flood insurance.”  This is one of the worst things that an insurance agent can hear! 

 It is standard practice in my office to offer flood insurance to all property owners.  The post of September 17th reminded us that ALL properties are in a flood zone!  A review of this insured’s file revealed that yes back in 2006 when he bought his Homeowner policy he was offered flood insurance and had signed a copy of this form.  Signed documents have a way of refreshing the memory.

You don’t want to be the person who says – coulda, shoulda, woulda!  Call today for a flood insurance quote.

However, not everyone obeys the law.  A recent study suggests the recession has caused an increase in uninsured motorists, those having no auto insurance.  This study puts Pennsylvania at 7% uninsured.

There is a  mistaken view that the Uninsured Motorist and Underinsured Motorist coverage that you buy on your auto insurance policy will pay benefits to the uninsured or underinsured driver.  No!  You are buying coverage to protect yourself and the occupants of your car if injured by an uninsured or underinsured driver.  Also these coverages will protect you as a pedestrian or bicycle rider if injured by an at fault auto driver.

If you are in an accident with an uninsured motorist in Pennsylvania your auto insurance policy’s First Party Benefits will pay your medical and loss of income expenses.  Damage to your car will be covered by your Collision coverage subject to your deductible.  However if you are severely injured, paralysed for example, Uninsured Motorist coverage will help to compensate for your loss. 

Another point to consider is that while the majority of drivers may comply with the law, many may have purchased liability insurance limits that are insufficient to cover the injuries inflicted on you and are thus termed underinsured motorists.

Your Uninsured and Underinsured Motorist limits can be equal to your Bodily Injury Liability coverage.   For example if you have a common limit of $100,000 per person and $300,000 per accident for Bodily Injury Liability your limit for Uninsured and Underinsured Motorist can also be $100,000 per person and $300,000 per accident.

Some people choose to reduce their Uninsured and Underinsured Motorist limits to save money on their insurance premium.  My response is – “Why are you willing to provide more insurance coverage for others than for yourself? ”

Another aspect to Uninsured and Underinsured Motorist called “stacking” will be discussed in a future post.  Until then  find your auto insurance policy to see how much of these important coverages called Uninsured  Motorist and Underinsured Motorist you have purchased.

One of the reasons for the deductible discussion when buying auto insurance, home insurance or commercial property insurance, is the deductible has a direct effect on the insurance premium you pay.  Logically the higher the deductible the lower your insurance premium. 

The decision the insurance buyer has to make is – Does the lower premium make sense for me if or when I have a claim?  Take my 2004 Lexus as an example.  Common deductibles for comprehensive & collision coverage are $50 and $500 respectively.  My combined premium for these 2 coverages is $141 per year.  Increasing my deductibles to $100 comprehensive and $1,000 collision saves $29.   Since I have not had an at fault accident in many years the cumulative savings may be worth the added risk.

A case can be made for having the same deductible for both comprehensive and collision coverage for three reasons:

1. A higher comprehensive deductible will save more money on the insurance premium
2. In some claim situations the argument of whether the claim is a comprehensive or collision loss disappears because with the same deductible it doesn’t make any difference.
3. A common comprehensive claim is damaged windshield.  If it can be repaired the deductible is waived.

However, you must have the means to pay the deductible should a claim occur.  Some people choose high deductibles to save money on the insurance premium only to have a claim and then not have the money to have their auto repaired.

Another reason to choose a higher deductible is smaller claims will not be submitted to your insurance company and this will result in premium savings over time.  For example, many Home insurance policies offer claims free discounts.   Raising your home insurance deductible from $250 to $1,000 could save $100 or more on the premium.  And not filing minor claims with your insurance company results in further discounts.

An extreme example of a high deductible is the person who was required by his mortgage company to have $27,000 of flood insurance on a building.  He bought the flood insurance but chose a $50,000 deductible.  While he may never be able to submit a claim, he has complied with the mortgage requirement.

Now it’s time for you to get out your insurance policy and contact me to discuss your deductible.

Rate Lock has been added to both new auto insurance policies written by Thome Insurance Agency and current auto insurance policies that have renewed since July 15. 

One of the unexpected developments is that in some cases adding  Rate Lock has actually reduced the premium of the auto insurance policy!  It makes little sense to charge less for the benefit of  guaranteeing that your premiums will not increase.  Although there is the rare chance that auto insurance premiums will actually decrease in the future.

The only explanation that company actuaries and product development personnel offered is that the predictive modeling used to calculate these rates is much more sophisticated than current pricing models.

Now please keep in mind that most people will have to pay an additional premium for Rate Lock.  The addition premium is unique to each individual.  You will have to decide if  Rate Lock is right for you.

TIP – The on-line quote request is complicated and requires plenty of information entry. My advice is - Call us at 717-367-1580 to see what Rate Lock can do for you.

Last week was a harsh reminder that floods are the most common natural disaster .

I wish to dispell 2 myths after speaking with many people who suffered water damage to their property caused by the remains of Tropical Storm Lee.

1. Too many people who had water damage said: “But I am not in a flood zone!”   Wrong!  Everyone lives in a flood zone.  I will repeat – Everyone lives in a flood zone.  Albeit some people are at lower risk  than others.  Remember – low risk does not mean no risk!  Flood insurance is available to insure against the risk of flooding.

2.  Flood insurance does not cover all water damage. In fact, many of my insureds who suffered water damage in their basements would not have been covered even if they had flood insurance.  Notice that the definition of flood in the flood insurance policy is that the water must be surface water.  Most of my insureds here in Elizabethtown and Mount Joy had water leaking in the walls or foundations of their basements.  Since this is not surface water the flood insurance policy will not respond.

Another thing to remember about flood insurance is that there is limited coverage for basements.  Finished basements are a real problem because the flood insurance policy does not cover the improvements to the basement.  These 17 items are covered in the basement.

Basement contents coverage is almost nonexistent!  Only 3 items of contents are covered.  The minimum policy deductible for high-risk zones is $1,000. And the deductible applies separately to building and contents. ((Refer to policy for actual wording))

The majority of my insureds suffered non-insurable losses.  All the rain we received caused water to leak or seep through the basement walls and foundations.  The only way to manage this risk is to take other non-insurance measures.  So get out the Drylock and install a sump-pump with backup.