Does it matter what insurance company you do business with?

As an independent agency, we have many options and companies to work with.  Ultimately, this provides a great benefit to our customers – one advisor/professional to work with who has dozens of companies to choose from to find the best coverage and rates for you.  First, the customer needs to decide what is most important to them when choosing an insurance company.  Some factors to consider are as follows:

  1. Claims Service – Yes, different companies have different levels of claim service.  Some companies make the process very easy and provide great support during the process; however, other companies pay claims begrudgingly and can make the process painful.  This is one of our highest priorities when choosing a market for you because a successful claim settlement equals a happy customer.

  2. Price – Price is a dominant force in our industry and is usually a consumer’s top concern.  Price does matter but it is important to verify that other factors are not being omitted to create a lower price – specifically coverage (amongst others).

  3. Coverage Options – Do you have a unique risk exposure? Does the company you have your insurance with offer all the coverage you need?  These are important questions to consider when electing to place business with a company.

  4. Deductible Options – Many companies are increasing home deductibles and limiting deductible options.  If the company you’re with doesn’t have a suitable deductible for you, it may be worthwhile to ask your insurance advisor to explore other options.

  5. Size & Financial Stability – As an independent agency, we represent small, local mutual companies to Fortune 100 companies.  Size does matter – to a point.  It’s important that the company you’re with has enough capital surplus to cover any catastrophic events that may occur.  Furthermore, it’s important that the company allocates enough resources to critical functions of the company (i.e. customer service/support, claims, underwriting, etc.).  With that said, bigger does not always mean better.  We represent some regional companies that are AM Best A+ rated (financially stable) and provide good service, claims service, and pricing (if not better).

As always, it’s important to discuss these factors and any other factors that may apply to you with your insurance advisor to provide the best fit for you.  Every individual and family is different and subsequently, has different needs.  As an independent insurance agency, we feel that our flexibility and options provides a massive competitive advantage and most importantly, the best options for you.

The 3 Biggest Factors that Influence your Homeowners Insurance

There are many factors that influence your homeowners insurance rate;  however, some influence your rate much more than others.  From credit/insurance scores, to claim history, to your age – we’ll dissect which factors you should pay most attention to if you want to lower your homeowner insurance rate.

  1. Location  – Yes, where your home is located affects your homeowners insurance rates.  And yes, it may play one of the largest roles in determining your rate. In determining how your location affects your rates – several factors come into play:

    1. How far away is your home from a fire department and fire hydrant?  Obviously, the closer you are to a water source and fire department, the quicker the response time will be in the event of a fire, and the lower the chance of a total loss occurring.

    2. Does your neighborhood have a history of frequent claims?  These factors may include how frequent break-ins are in your neighborhood to how likely a catastrophic weather event is.  Most insurance companies use zip codes when utilizing these factors.

    3. Is the surrounding area hazardous?  Homes surrounded by woods, brush, and other items may increase the likelihood of a loss and subsequently, may increase your rate.

Yes – location, location, location matters.

  1. Home Characteristics – First and foremost, the characteristics of your home determine how much insurance you need to carry to replace/rebuild your home in the event of a total loss.  Unless written on a different form, most standard insurance companies require that homes insured on a homeowners insurance form (HO3 & HO5) be insured at 100% of replacement cost.  However, other factors may contribute to other your premium, such as:

    1. Age of home – typically, older homes will cost more to insure (especially those with older roofs) as they generally cost more to replace.  For individuals who own homes built before 1940, you may want to ask  your insurance agent about a functional replacement cost coverage.  This coverage rebuilds your homes with newer materials that are functionally the same as the older materials.

    2. Structure type – whether your home is brick or wooden-frame plays a role in the rating factor of your premium.  In the midwest, brick homes are usually less susceptible to normal losses (wind/hail) and subsequently, cost less to insure.

    3. Size of your home – Size does matter.  Larger homes obviously will cost more to replace and consequently, cost more to insure.  Additionally, larger garages are more likely to be broken into and usually hold a higher value of contents.  Higher risk = higher premiums.

  1. Insurance/Loss History – As many homeowners find out the hard way, the more claims you file, the higher your insurance premiums become.  This may be true even if the loss was due to weather related activity.  Insurance companies usually use prior history to Insurance companies generally look at two factors when determining an insured’s loss history – loss frequency and loss severity.  If you frequently file small claims, your rates will be higher for two reasons:  1) Insurance companies deem you likely to file claims in the future (which costs them more money), and 2) smaller claims are usually preventable.

If you’ve had a severe loss in the last 3-5 years, many insurance companies will either choose not to insure your property or charge a higher premium as they deem you to be a higher risk client.

These are three of the main factors that actuaries use to determine your homeowners insurance premium.  There are several other actions you can take to lower your premium (like replacing a shingle roof with a metal  or hail resistant alternative).  As always, it’s best to discuss your risk and exposure with your insurance agent to determine the best way to customize your risk management program and potentially lower your premiums.

8 Things to Know About Home and Auto Insurance

Fun factHere are 8 interesting facts about home and auto insurance (courtesy of

  1. New Jersey is the most expensive state for auto insurance where the average expenditure is $1,183.95.  Idaho is the least expensive with ana verage expenditure for coverage at $535.15. — Insurance Information Institute

  2. The average auto liability claim for property damage was $3,073 in 2012, while the average auto liability claim for bodily injury was $14,653.  That same year, the average collision claim was $2,950, and the average comprehensive claim was $1,585. (ISO)

  3. 25% percent of consumers rent their primary residence; however, 46% of renters remain uninsured.  (J.D. Power)

  4. In 2013, the homeowners industry will generate its first statutory underwriting profit since 2007.  The GAAP homeowners results from 2011-2013 for four of the largest homeowners insurance companies (by market share) reported an aggregate homeowners combined ratio of 79.6% for 2013.  (Fitch Ratings)

    1. It’s important to note that this may not necessarily mean a decrease in homeowners premium, but if profitability can be attained for the full-year 2014, I would expect to see property premiums decrease.

  5. The most frequent type of homeowners claims are related to wind or hail (especially in WI!); the costliest are related to fire, lightning or debris removal.  About one in 20 insured homes have a claim each year. (III/ISO)

    1. About one in 50 insured homes have a property damage claim related to wind or hail each year.

    2. About one in 65 insured homes have a property damage claim caused by water damage or freezing each year.

    3. About one in 200 insured homes have a property damage claim due to theft each year.

    4. About one in 230 insured homes have a property damage claim related to fire, lightning, or debris removal ever year. (III/ISO)

  6. One in 800 homeowners policies have a liability claim related to the cost of lawsuits for bodily injury or property damage that the policyholder or family members cause to others. (III/ISO)

  7. Dog bites account for more than one-third of all homeowners insurance liability claim dollars paid out in 2012, costing more than $489 million.  (III)

Vacant and Unoccupied Homes – Homeowners and Dwelling Insurance

Vacant HomeDo own a vacant home?  Do you own any unoccupied homes?  Do you renovate dwellings and then subsequently rent them out?  Any of these situations may have unintended consequences on your insurance policies.

Insurance companies are very clever in the wording of their policy forms (which is why its important to read your policy forms!).  They sneak exclusions into the policy that only apply if the dwelling is unoccupied or vacant.  For example, if you buy a rental dwelling with the intent to renovate prior to renting it to tenants, several coverages are excluded until the home is occupied.  For example, theft and vandalism is excluded if the home is vacant for more than 30 days.  Damage caused by freezing pipes is another common exclusion among vacant or unoccupied homes.  Please note that each insurance company will treat their vacancy exclusions differently, so it is important to read your insurance forms for exact coverage.  More importantly, it is essential that precautions are taken to prevent any of the above losses from happening.  Many common precautions are:

  1. Keeping the heat level high enough to prevent freezing pipes

  2. Installing a security system to prevent any break-ins.  Other simpler measures are to lock all door and windows and have a neighbor or relative check the house daily.

  3. Have motion detecting lights installed outside

  4. Install lights inside on a timer system to give the appearance that the home is occupied

  5. Shut off the water in the home while unoccupied to prevent any catastrophic water damage

Furthermore, many of the same exclusions apply if you own a home with no intention of renting it out, but rather plan on occupying it yourself.  However, as many homeowners can attest to, many owners don’t move into their homes right away.  Many existing homeowners or renters insurance policies will extend coverage for personal property to their new location for a temporary time period (i.e. 30 days); however, no coverage is extended to the dwelling, structure, or detached structures.  So a new home that is bought but unoccupied may be susceptible to the exclusions listed above.

It is important to be upfront and honest with your insurance professional on the expected timeline of occupancy so that they can determine what coverage may be best for you.  Also, keep them up to date on any changes to your timeline for occupancy so any needed action may be taken.  Some companies do offer specialized, short-term (one, three, or six month) policies specifically designed to cover vacant or unoccupied homes.  If you plan on buying a new home – whether it be for yourself or for a tenant – it is very important to consult with your insurance professional to determine if any of these exclusions may apply to you.

Snow adds to winter weather headaches for homeowners insurance

Icicles can be beautiful; however, they may also be a warning sign for ice dams.
Icicles can be beautiful; however, they may also be a warning sign for ice dams.

We are on the verge of having a record setting winter – both in terms of cold temperatures and upset residents.  As cabin fever approaches unbearable levels, I find myself saying that we are only a month or two away from spring (hopefully).

So, what does this weather have to do with homeowners insurance? Plenty.  Freezing temperatures are usually associated with freezing and cracking pipes; however, winter weather can cause other headaches as well.  

The biggest issue with snow – particularly in large amounts – is the stress it can apply to a home.  The first major risk associated with snow accumulation is the risk of the roof collapsing due to the weight of ice or snow.  It’s important to monitor the amount of snow on your roof and take preventive measures as needed.  A simple way to avoid this risk is to get the snow that has accumulated on the roof off of it.  There are many reasonably priced tools that assist this task.

A more frequent and common risk in cold weather climates are ice dams.  Ice dams form on your roof and can be cause catastrophic damage – a nightmare of any homeowner or renter.  Ice dams are caused by heat that collects in the attic and warms the roof – except for the eaves.  This causes snow to melt on the roof and freeze on the eaves. Finally, ice accumulates along the eaves, forming a dam.  Meltwater from the warm roof backs up behind the dam, under the shingles, and into the house – creating an array of damage and a potential homeowners insurance claim.  There are several precautions that can be taken to avoid ice dam formation.  First, as discussed previously, remove any accumulated snow off the roof.  Second, ensure that your home has proper insulation and venting – particularly in the attic – to avoid heat collecting in the attic.  This not only saves money on your energy bill; it also prevents potential homeowners insurance claims.  Lastly, keep an eye out for icicles hanging from your roof – it’s a sign that you may have ice dams.

Every homeowner’s insurance policy is slightly different so it is important to review your policies with your insurance adviser.  This should be done at least once per year.  It’s important to review coverage, deductibles, and discuss any potentially hazardous situations your property may present (and solutions for these hazards).

Now that it is officially March and daylight savings time is upcoming – spring is right around the corner.  Until then, enjoy what winter has to offer!