Everything You Need to Know
The best thing to do in order to ensure you have purchased the right insurance is to first determine your risks. Then, as you follow along on this website, you’ll learn how to make the informed decisions that will help you purchase exactly the coverage you need – not too much, not too little.
Let’s get started…
What is Insurance and Why Do I Need it?
In simple terms, “risk” is exposure to loss. Risk Management is the act of managing your personal potential for loss and what that loss will cost you. One way of managing risk is to purchase insurance. Insurance is the act of transferring your risk to someone else that will cover some or all of your losses for a fee called a “premium.”
The reason we buy insurance is either because we want to make sure we’re protected if something happens, or because the bank requires us to as a condition or requirement of our loan – or both. The key is to make sure you have chosen the right insurance company – and that you purchase the right policy for the right price.
In regard to homeowners insurance, there are actually nine major risks to be concerned about.
Choosing an Insurance Partner
What is an insurance company rating and why does it matter?
Insurance companies are evaluated by several different bureaus based on financial stability, longevity and the way companies perform. The ratings are an important factor in choosing your insurer. Bankers is proud to say that we maintain a “B++” rating with A.M. Best – the most highly respected bureau providing insurance ratings.
That said, it’s also important to note that, while ratings are significant, they are no guarantee. A significant number of “A‐rated” insurance companies folded after some of the bigger-named storms hit Florida and Louisiana over the past few years. Please view these ratings as a useful evaluation tool, but not your only criterion when choosing an insurance company.
What is often even more important than a carrier rating is a catastrophe “rating”–especially if you live in coastal states like Florida, Louisiana and South Carolina. Bankers has weathered an impressive 25+ catastrophes and offers exceptional customer service and claims response time. Imagine the risk of choosing a new insurance company that has never even handled a catastrophe. Knowledge like this is priceless to you. Your insurance company should have years of experience when it comes to catastrophe management. You want a carrier that has “been there and done that” and will be there for you during what can be one of the most frightening times of your life.
How to Select the Right Coverage at the Right Price
The best thing to do in order to ensure that you have purchased the right insurance is to first determine your risks. Then, as you follow along on this web site, you’ll learn how to make the informed decisions that will help you purchase exactly the coverage you need — not too much, not too little.
Property insurance is meant to cover the things you own, such as building, furniture or additional structures.
Primary Coverages for Property Include:
- Personal Property
- Loss of Use
Liability insurance protects your financial well-being by providing coverage for lawsuits for bodily injury or property damage for which you or your family are responsible.
Personal Liability Includes:
- Medical Payments
- Bodily Injury Liability (You broke my arm)
- Property Damage Liability (You broke my stuff)
- Personal Injury Liability (You damaged my reputation)
How much insurance do I need?
It is important, first of all, that you know the value of your home and its contents so you can insure yourself appropriately. You should also give careful consideration to the amount of deductible you choose, as this is the amount you are responsible for paying when a claim is made. The last thing you want to be is under‐insured.
Insurance policies have set amounts that determine the value of the property and set a maximum that will be paid in the event of a total loss. Careful consideration should be given to these amounts (referred to as “limits”) when purchasing a policy.
There are varying limits of coverage available in a policy. Some limits are grouped with an underlying per‐item limit. Reviewing these limits with respect to your property or situation is critical. For example, your standard Homeowners policy has limitations for theft of items such as jewelry, silverware, and guns. Based on your personal situation, you may want to consider increasing some of these limits.
Full Replacement Cost vs. Actual Cash Value
Full Replacement Cost coverage is preferred to Actual Cash Value coverage. Here’s why: Actual Cash Value only pays what an item is worth today – after depreciation. So if you purchased a $5,000 plasma TV, and it is now worth $2,000, Actual Cash Value will only pay $2,000. Full Replacement Cost coverage will pay you the whole $5,000 to replace that same TV. Full Replacement Cost coverage may cost a little more, but it provides your best chance to replace what you’ve lost. As you can see, this is a very important consideration when purchasing insurance.
It’s important to note that your basic Homeowners policy provides coverage for personal property only at Actual Cash Value.
Insuring to the right value
As a homeowner, there are several different values you have to think about: market value, assessed value, and replacement value. Market value fluctuates depending upon what a seller and buyer are willing to come to terms on. Assessed value is what the tax appraiser’s office bases your property taxes on. These two values include the land and the structure.
From an insurance standpoint, the most important value is the replacement value. This amount is determined by using a formula based on the construction costs in your particular zip code. In effect, this is what a contractor would charge to rebuild your house today with materials of like kind and quality.
It’s important to insure for the full replacement value of the home so that you will be covered in the event of a total loss. The land value is not included in replacement value because only the structure is insured.
There are many additional coverages available that vary by policy. These options can be used to customize your policy to meet your coverage needs. We recommend that you discuss your specific situation with your agent. Examples of some additional coverages are listed below:
- Ordinance or Law
- Dog Liability
- Water Backup
- Money & Security
- Employment Theft
- Business Interruption
Managing the Cost of Insurance
There are many ways to manage the cost of insurance – from selecting deductibles to ensuring that you get the discounts you may qualify for. Please remember, when choosing your deductible, to carefully consider the amount you can afford to pay out-of-pocket in the event of a loss.
The policyholder is responsible for a portion of the cost when a covered loss occurs. The larger the deductible, the lower the premium. Many policies have multiple deductibles. For example, a Homeowners policy in Florida has one basic deductible for most types of losses and a special deductible for hurricanes.
Discounts are generally given for actions that reduce the risk of loss. An example might be installing storm shutters to protect your home against a storm. Ask your agent if you qualify for any discounts that will help you save money on your insurance.
You may be eligible for discounts based on your personal characteristics, as well as features of your home that will reduce your premium. Not all discounts are available in all states. Please consult with your local agent for availability.
Discounts you may qualify for or wish to discuss with your agent:
- Claim-free Discount—This discount rewards you for not filing a claim for either three or five years.
- Financial Responsibility Discount—This discount rewards a good credit score. Numerous research studies have been done showing that the better a consumer’s credit score, the less likely they are to file an insurance claim.
- Retiree (or Mature Homeowner) Discount—This discount is applied when you have reached a certain age and are retired. Statistics show that a retired homeowner is more likely to be at home, thus reducing the likelihood of a major fire spreading through the house or a burglary to occur in the home.
- Multiple-Policy Discount—This discount is applied if you have another policy with our company.
- New Purchase Discount—This discount is offered to you when obtaining your policy to coincide with the purchase of a home which will be your primary residence. The discount is phased out over time.
- Protective Devices Discount—This discount is offered when you have approved, active, and properly maintained installations of burglar alarms, fire alarms and/or automatic sprinklers.
- Protective Package Discount—This discount is offered when you have dead bolts on all exterior doors, smoke detectors, and a fire extinguisher in the residence.
- Renovation Discount—This discount is offered when your home or condominium has undergone qualifying renovations to meet current building codes. There are four areas that can qualify for a discount: Plumbing, Heating/Air‐conditioning, Electric and Roof. This is a diminishing discount that decreases as the renovations age.
- Secured Community Discount—This discount is offered for homes or condominiums located in gated communities with all entrances to the community protected by 24‐hour manned security or passkey security.
- Wind Mitigation Discount—This discount is offered when your house or condominium has features that make it more resistant to wind damage. Some examples of features are roof shape, type of roof covering, how the roof deck is attached to the rafters, how the rafters are attached to the wall, and if the home has installed exterior shutters. The discount varies based on the combination of features on a house or condominium.
Limitations apply. Some discounts may not be available in combination with certain other discounts.
Working with an Agent
What is the Value of Working with an Agent?
There two types of agents: exclusive and independent. Exclusive agents represent a single insurance company. An independent agent represents several companies.
You are limited with an exclusive agent if the company they represent does not write the coverage you need. The exclusive agent typically has no other options for you.
The independent agent has several companies from which you can choose the coverage you need. Plus, by acting as independent counselors, they work for you rather than an insurance company. Your independent agent has the benefit of offering you local knowledge of the risks associated with your particular area and the companies that can best meet your needs.
In other words, your independent agent offers you choices that exclusive agents can’t.
Having a Conversation with Your Agent
Insurance is complex and you need professional advice you can trust. We partner with top-quality independent agents who can help guide you through the purchasing process. There are many things you should be asking your agent prior to purchasing insurance for your home or business.
First, be prepared before you visit your agent. Do an inventory of your home or business. You may be surprised about how much you really have. Visit knowyourstuff.org.*
Below are a few of the types of questions your agent can answer:
- Does my lender require flood insurance? Am I in a special flood hazard zone? How much flood coverage do I need?
- What is umbrella insurance and why would I need it?
- I collect antiques and jewelry. How do I get these covered?
- Do I need special coverage for an in‐home office?
- Do I need employment practices liability insurance and what does it cover?
- Is my company required to maintain worker’s compensation coverage?
- What will happen if I cannot operate my business?
- I conduct business out of state. Is my electronic information protected?
- What is identity theft and is there a way to protect myself from it?